Is This Retirement Stock Worth Holding Until Retirement?

Here’s why Chartwell Retirement Residences (TSX:CSH.UN) could be a top retirement stock that investors are overlooking right now.

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When choosing stocks to hold until retirement, investors tend to prefer ones that will generate significant income in the long term. In this regard, Chartwell Residences (TSX:CSH.UN) is a stock that is preferred by many primarily due to its stable dividend payouts over the last 10 years. 

But, despite its income-generating potential, many investors question whether it is profitable to hold this stock to retirement. For those of them in this dilemma, these are a few points that they must consider. 

Chartwell completes its care homes deal with AgeCare Health Services

As per an article dated Dec. 8, 2022, Chartwell has completed transferring the ownership of two of its long-term-care homes in British Columbia: Carlton Care Residence and Malaspina Care Residence. These properties have been sold to AgeCare Health Services Inc. and a fund that is under the management of Axium Infrastructure Inc.

The total transaction value for this sale was US$112 million, out of which, the company received US$16 million in cash. Chartwell used these funds to pay off the outstanding mortgage debt on its British Columbia properties. 

Additionally, the company also plans on using the net proceeds from this transaction to settle other debts and for corporate uses. These factors will help this organization strengthen its financial position and provide better returns in the long run. 

Chances for unitholders to participate in Chartwell’s reinvestment plan

The real estate company allows its unitholders to participate in its distribution-reinvestment plan (DRIP). By participating in this scheme, eligible investors can use their monthly cash payments to buy trust units. Moreover, they can also avail a bonus equal to 3% of the cash-distribution amount.  

Through this reinvestment plan, Chartwell allows its unitholders to steadily increase their stake in the company without incurring any brokerage fees or commissions.    

Canada’s growing senior citizen population

According to an article dated January 30, 2023, Canada has an increasing senior citizen population. In the summer of 2022, one out of five Canadian citizens was of a minimum age of 65 years. Experts predict that by 2030, senior citizens can occupy almost a quarter of the total population.

As a result, there will be high demand for retirement communities in the near future. Thus, buying stocks of companies operating in this sector can be of great profit. As the largest provider of senior retirement homes in Canada, Chartwell has huge potential for increasing its business operations in the coming years.  

Bottom line

These three factors show that Chartwell stocks have great potential to provide a stable income and capital appreciation in the long run. Thus, investors can safely hold on to this stock till their retirement. 

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 Chris MacDonald has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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