The Canadian healthcare sector has grown in recent years with the emergence of marijuana, or cannabis, companies. But while these marijuana companies are an increasingly important part of the healthcare sector, the volatility and risk of investing in their stocks cannot be overstated.
I will therefore focus here on stocks that can be valued on fundamentals with more visibility, which is certainly what many investors are more comfortable with.
Here are three stocks that are benefitting from the strong fundamentals in the healthcare sector and that can be expected to continue to thrive as the aging population continues to march on.
Northwest Healthcare Properties REIT (TSX:NWH.UN)
With a current dividend yield of 7.43%, Northwest represents a good opportunity here.
The company offers a high-quality global, diversified portfolio of healthcare real estate properties located throughout Canada, Brazil, Germany, Australia, and New Zealand.
Northwest Healthcare’s properties generally have stable occupancies and long-term leases, they currently have attractive supply/demand fundamentals with an occupancy rate of 96.3%, which means the stock is a lower risk play on the sector.
It is a healthcare and a real estate play, and although this REIT has a higher debt level than its peers, its growth plans include reducing the debt over the next few years and investors are compensated for this with its high dividend yield.
Chartwell Retirement Residences (TSX:CSH.UN)
In another REIT play on the aging population/healthcare theme, Chartwell is the largest provider and owner of seniors housing communities from independent living to long-term care.
Chartwell has been benefitting from rising occupancy levels as an uptick in demand has been accompanied by a stagnant supply of seniors housing.
With a 4% dividend yield, four consecutive years of cash distribution increases, and a quality portfolio of properties, Chartwell is a solid investment that is well positioned for the future.
Bausch Health Companies stock is a turnaround stock for those investors willing to take on a higher risk level.
The company has been performing well ahead of expectations in the last few quarters, and after its most recent results report, 2018 EBITDA guidance was bumped up again, by $100 million, to between $3.3 billion and $3.45 billion.
The earnings release was another building block added to the small but growing tower of investor trust and confidence, as these results were once again, better than expected.
Hurdles going forward are the company’s oversized debt burden (which is very slowly being worked down) and lingering legal issues (which are slowly being resolved).
New product launches are expected to drive growth going forward, and while the risk in the stock remains, if these product launches go well, the upside to the stock is big.
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Fool contributor Karen Thomas owns shares of NORTHWEST HEALTHCARE PPTYS REIT UNITS. The Motley Fool owns shares of Bausch Health Companies. Northwest Healthcare is a recommendation of Stock Advisor Canada.