Basic statistics provide a clear reason why investors are looking at healthcare investments. Americans aged 65 and older accounted for 17% of the U.S. population in 2020, or about 55.8 million, according to the U.S. Census Bureau.
Some of those Americans will turn 80 this year, which is expected to create greater demand for senior care facilities. In fact, as quoted by CNBC, "The 80+ population is set to increase meaningfully over the next few years, which will drive a material increase in demand for senior housing," wrote Jefferies analyst Joe Dickstein."
We also have to consider that people are living longer, which increases demand. Plus, there's a growing shortage of caregivers to meet this explosive demand.
As noted by Medsien.com, "The growing aging population is driving demand for more medical care, as we face provider shortages. Patients 65 and older account for 34% of the demand for physicians. By 2034, patients over 65 will account for 42% of the demand. An aging population means higher use of health care services and a greater need for family and professional caregivers."
Real estate investment trusts (REITs) are one of the best healthcare investments you can make for investing in the aging of America. In addition to gaining exposure to this growing market, you’ll get attractive dividend yields that can provide a passive income stream.
Healthcare Investments to Buy: American Healthcare REIT
My first pick is American Healthcare REIT (NYSE: AHR). The company is focused on acquiring, owning and managing healthcare-related properties across the United States.
The company's portfolio includes senior housing communities, skilled nursing facilities, medical office buildings and outpatient care centers. All of the properties operate under long-term net lease or triple-net lease structures, designed to provide stable and predictable rental income.
AHR is a new REIT that only started publicly trading in 2024. However, in that short time period, the REIT has delivered a total return of over 290%.
The total return includes a dividend with a yield of approximately 2.33% as of the current writing. It just paid out a dividend of 25 cents per share on October 17.
Analysts have a consensus price target of $51 on AHR, but recent price targets are moving higher. Also supporting a higher price is the idea that analysts forecast earnings growth of over 19% in the next 12 months.
Healthcare Investments to Buy: CareTrust REIT
My second pick is CareTrust REIT (NYSE: CTRE). The company’s business model is similar to that of the American Healthcare REIT. CareTrust acquires and manages net-leased properties serving the senior housing and medical markets.
The company’s portfolio spans skilled nursing facilities, assisted living communities, independent living properties, medical office buildings and life science facilities. It also yields 3.92% and just paid a dividend of $0.335 per share.
The company’s earnings report in the last quarter was solid. Its funds from operations (FFO) of 43 cents missed by two cents. However, its revenue of $112.74, up 63.3% year over year, beat by $10.45 million.
In the last five years, the CTRE REIT has delivered a total return of 142.47%. That includes the company’s dividend, which is growing at around 5% per year.
As of this writing, the stock is trading slightly above its consensus price target of $35.78. However, analysts are increasing their price targets and are estimating the company’s earnings will increase by over 12% in the next 12 months.
Follow the Trend
Investing for the long term means taking what the market is giving you. In short, if you want to make money from our aging population and collect a consistent yield along the way, you can't go wrong with these healthcare investments.
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