Investing for retirement with retirement stocks? That’s clever! Assisted living stocks might not be on everyone’s mind.
But as the baby boomer population ages, this group of stocks could help set you up for retirement. Let’s have a look at some of the best senior housing stocks available to buy now.
Best Assisted Living Stocks To Watch
Best Assisted Living Stock #1: Brookdale Senior Living, Inc. (NYSE: BKD)
Brookdale is America’s top senior-housing operator and our number-one pick on our list of best assisted living stocks.
BKD offers a comprehensive range of services, including assisted living, independent living facilities, memory care, skilled nursing facilities, rehabilitation therapy, and more.
The assisted-living giant operates close to 57,000 units in 673 senior-living communities across 41 states. Thus, making it the largest leader by communities and units operating in the industry.
Brookdale’s massive operation helped it achieve 10% YoY RevPAR growth in 2022. RevPAR is a key KPI used in the hospitality and assisted living sector.
The metric helps assess the average rate at which properties are able to fill available rooms. An increasing RevPAR is indicative that occupancy rates are also increasing.
Something really significant is happening with BKD at a technical level. Shares of the company have been finding support near the $3/$3.50 area.
These are not only the all-time low levels for the stock, but an area in which Brookdale Senior Living shares have reversed at least on two different occasions.
First, it did so at the bottom of the great recession before delivering over 1200% returns for investors over a six-year period.
The second time was during the 2020 COVID downturn when shares of the company moved upwards close to four times their value.
Of course, as we all know, past performance is not indicative of future success. But, if the company finds a floor in this area again, investors could be surprised to see the results.
Fundamentally, the company’s debt-to-equity ratio (9.16) appears to be higher than the rest of the industry.
Excessive debt might not be attractive to most investors. But the debt has been largely used for acquisitions which have placed the company in a position of strength.
Being the largest operator in their sector gives the company unique opportunities that smaller players might not have.
For example, reducing some operational costs and giving the company leverage when it comes to negotiating with suppliers.
One must also consider that BKD could be plotting to win the long game.
Thus, its excessive debt fueled by acquisitions could actually pay back with interest in the long term. Particularly as the aging population of baby boomers could help drive business for BKD in the near term.
But for now, the penny stock will need to fight to hold its floor. Otherwise, there could be more pain on the way before things get better.
Nevertheless, the Brookdale Senior Living stock remains an attractive investment opportunity in the senior living and assisted living space.
The company’s market share and a broad range of services make it one of our favorite senior housing stocks!
Best Assisted Living Stock #2: Welltower Inc (NYSE: WELL)
Welltower is a healthcare-infrastructure real estate investment trust (REIT) that also invests in senior housing and assisted living properties.
Although the REIT is diversified into other areas of healthcare, it’s still well-positioned to benefit from the aging baby boomer population.
Particularly since baby boomers could help boost revenue from other healthcare properties like hospitals.
Diversification into multiple properties and canvases could also help WELL mitigate risk and keep volatility under control.
With an enterprise value of $50 billion, WELL qualifies as the world’s largest healthcare real estate investment trust.
Its portfolio is comprised of more than 1,400 properties across the United States, Canada, and the United Kingdom.
Like all REITs, investors can expect to be compensated generously for owning a piece of the WELL pie.
The trust pays shareholders an attractive 3.24% annual dividend yield which can be compounded for exponential growth.
Price action for the stock has performed quite well since the REIT IPO. Zooming out on the chart, investors can easily see a long-term upward trend forming.
While shares have had their ups and downs, the overall direction thus far is clear, upwards.
But as we always say, past performance is not indicative of future success. Therefore, it’s always a wise idea to perform your own due diligence and manage your positions according to best practices.
The company’s fundamentals could also help support the idea of continuing the upward trend.
For example, their debt-to-equity ratio came in at 0.69. Considerably lower than the industry average and a big advantage in the current inflationary macroeconomic environment.
Best Assisted Living Stock #3: Ensign Group Inc (NASDAQ: ENSG)
Ensign Group is a leading provider of healthcare services for the aging population. Some of their personal care services include assisted living, skilled nursing, home health, hospice, and rehabilitation therapy.
The group’s operations are spread across the nation, including 13 different states.
Among them, they share 251 skilled nursing operations, 11 senior living operations, and 26 campus operations.
We added ENSG as one of our favorites due to its financial results and clinical quality.
Since 2009 the company has seen adjusted EBITDAR growth that’s trending upwards from $87 million to a whopping $537 million.
The increase in EBITDAR runs parallel to a steady decrease in the percentage of 1-star facilities in their operation.
Thus, suggesting that the quality of their services has demonstrated a strong correlation with their earning potential.
As a result of its ability to acquire and manage high-quality facilities, the company has maintained a leading market position.
Their efforts haven’t gone unnoticed by the market, as ENSG shares have maintained steady growth for nearly two decades.
Shares of the company find themselves only a mere 8% from their March 2021 all-time high and have attempted to break it several times.
Whether they will or not is yet to be seen, but the macroeconomic conditions for the sector could help shares move higher in the long term.
In the meantime, shareholders can enjoy a 0.25% dividend yield that could be compounded for growth.
Are Assisted Living Stocks a Good Investment?
Assisted living stocks could be a compelling investment as the aging baby boomer population helps fuel growth in the senior living industry.
However, the investment might require some patience as it could take time for the trend to develop.
Baby boomers make up one of the largest sectors of the United States population. Due to its size, the aging demographic has helped fuel numerous economic trends over the years.
As the demographic ages, so do their needs. As a result, industries catering to older populations may gain momentum in the coming decades.
Some of these categories may include healthcare, adult diapers, pharmaceuticals, holidays, house repairs, jewelry, recreational activities, and assisted living.
The minimum age to join assisted living facilities is 55, but some start later in life and are near retirement age.
By 2030 every Baby Boomer will be able to qualify for the latter, opening the market up to a larger clientele.
But it’s possible that most boomers will enjoy some of their time in retirement before joining an assisted living community.
This could be part of the reason behind conservative analysts’ expectations for the sector.
Experts project a CAGR of only 5.5% through 2030. But as the population ages, demand could eventually pick up.
There is yet another compelling reason to believe the industry could pick up speed. Evidence of it can be found in a report from the National Investment Center for Seniors Housing & Care (NIC). The report describes the changes in occupancy seen during and after the 2007-2008 recession.
NIC’s findings suggest that the occupancy of elderly residents did pick up after the recession ended. However, the initial drop in occupancy was not considered to be significant.
Therefore, the industry could be considered to be somewhat resistant to economic downturns. Thus, offering investors economic stability during difficult times.
Finally, rising costs for operators and the post-pandemic shockwave have propelled the industry into a cycle of consolidation.
This trend could benefit large companies like Brookdale Senior Living (BKD) as they take over smaller operations and grow their portfolio.
Lastly, there are other stocks to buy like Omega Healthcare Investors (NYSE: OHI) which are also good bets but couldn’t make our list.
Now that you know more about assisted living stocks, you might want to add one (or more) to your portfolio.
FAQs
What is The Largest Assisted Living Company?
The largest pure-play assisted living company is Brookdale Senior Living (BKD). The senior-housing operator manages over 57,000 units across 673 assisted-living communities in more than 41 states. However, Brookdale only has a market capitalization of $650 million, making Welltower (WELL) a larger mixed-operator with nearly $37 billion in size.
How Big is The Senior Living Industry?
The senior-living industry was recently valued at $92 billion. The same report suggests that the assisted living services market is expected to grow at a compound annual growth rate of 5.53% from 2023 to 2030. If accurate, the senior living industry could be worth as much as $140 billion by 2030.
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