According to UBS, the aging population is expected to be a tailwind for the stock market, with two dividend stocks expected to earn profits. Longevity is one of three “transformative innovation opportunities” that will drive the stock market over the next decade, a team of strategists said in a memo Wednesday. The other two are artificial intelligence, power and resources. “The combination of ever-growing life expectancy and demographic changes to older adults creates a variety of investment opportunities,” writes the UBS strategist. One area already established in the space is retirement life, growing at a combined annual growth rate of 4% until 2030. The oldest baby boomer generation is rapidly approaching its 80th birthday, which will increase the demand for advanced housing options such as independent living, support and nursing homes. The National Investment Center for Seniors Housing & Care predicts that 200,000 additional senior units will be needed in 2025. An additional 500,000 units by 2028, and 775,000 units by 2030. The portfolio includes senior residential communities, skilled nursing facilities and clinic buildings, Ventas has a dividend yield of 2.8%. Analyst Jonathan Woloshin likes real estate holdings and geographical location diversity. Ventas has 1,400 properties in the US, Canada and the UK. He noted that the continued recovery in senior housing, a hit with Vtr Ytd Mountain Ventas Covid Pandemic, led to an increase in Ventas’ senior housing occupancy levels. New senior housing supply is now at its lowest level since the first quarter of 2013, he noted. “The increase in occupancy has strengthened improvements in pricing capabilities and margins,” Woloshin said. He added that the inconsistent management practices seen in recent quarters have eased, and Ventas shares are closing the valuation gap with the company’s biggest peers. Stocks are up about 16% per year. WellTower also has a diverse portfolio. The company boasts medical characteristics of over 1,500 senior housing, acute communities and outpatients in the US, UK and Canada. We pay a dividend yield of approximately 1.8%. “Well has a strong senior housing portfolio in the market of many high-varie and tenants, which continues to benefit the company in the post-Covid-19 world,” writes UBS analyst Thomas Parmentier. “And further, better senior occupancy has strengthened well stock prices.” YTD Mountain Welltower The stock, which has risen 21% so far this year, is trading to colleagues at a “significant premium rating.” However, he believes the premium is justified given Welltower’s strong operational performance and growth. “In our view, we are in a solid financial position thanks to our investment grade balance sheet, excellent management team, manageable debt maturity and solid access to liquidity,” Permentier said. “We believe dividends are safe and could increase if the operation results continue to improve.” Get tickets for Pro Live Join us on the New York Stock Exchange! An uncertain market? Earn Edge with CNBC Pro Live, the first exclusive event on the historic New York Stock Exchange. Access to expert insights is paramount in today’s dynamic financial situation. As a CNBC Pro subscriber, we recommend attending the first exclusive and in-person CNBC Pro live event held at the iconic NYSE on Thursday, June 12th. You will also get the opportunity to network with CNBC experts, talent and other pro subscribers during exciting cocktail hours on the legendary trading floor. Tickets are limited!
Dividend Stocks Playing “transformative” opportunities for longevity: UBS
