The health care sector in Canada does not get much attention. Understandably so, as it makes up a very small percent of the TSX, and there are not many large companies to choose from.
So as Canadian investors, we have to get a little creative to meet our goal of exposure to the defensive healthcare sector.
First, we can look to the U.S. and its massive healthcare sector, with numerous high-quality stocks to choose from and healthcare sub-sectors to get involved in.
We have medical device companies like Medtronic PLC (NYSE:MDT), for example, a $129 billion global behemoth that provides investors with a 2% dividend yield, providing exposure to the lucrative medical devices industry that continues to revolutionize and improve patient care. The stock has been a great long-term holding, with a steadily rising stock price in the last ten years (185% return) and strong and rising dividend income.
Second, we have to cast a wide net in our search in Canada. So what are our options?
I have zeroed in on two stocks that will continue to benefit from the positive fundamentals of the healthcare sector, as the aging population drives strong demand today and well into the future.
Canopy Growth Corp. (TSX:WEED)(NYSE:CGC)
Canopy Growth stock and cannabis stocks have lit the TSX on fire, driving out-of-this-world gains for the healthcare sector in Canada — returns not witnessed since the early 2000s biotech boom that took place both in Canada and the U.S.
With legalization and the medical community finally accepting the potential benefits that cannabis can bring to select patients, the only way is up for medical marijuana sales. As one of the leading cannabis companies, Canopy Growth is well positioned to benefit. Its international medical brand, Spectrum Therapeutics, is focused on patient education, thus simplifying healthcare interactions, and outreach.
Further, research continues into the benefits of cannabis therapies for different diseases and issues.
But, as we know, we will have to pay up for this stock — and accept a lot of volatility.
Northwest Healthcare Properties REIT (TSX:NWH.UN)
Turning to something very different, I recommend Northwest REIT. It’s a REIT, real estate owner and operator, and a lower growth proposition. However, it also clearly benefits from solid fundamentals in the healthcare industry.
With Northwest, you can rely on a generous dividend, for a dividend yield of 6.7%, and you can rely on the strong and growing demand for its real estate portfolio of medical buildings globally, such as hospitals, clinics, doctor offices, etc.
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This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.
Fool contributor Karen Thomas owns shares of NORTHWEST HEALTHCARE PPTYS REIT UNITS. Northwest Healthcare is a recommendation of Stock Advisor Canada.