Senior Housing: A Boomer Buy

04/19/2017 2:50 am EST

Focus: REITS

Jim Powell

Principal Analyst, Global Changes & Opportunities

The goal of most of our stock investments is capital appreciation. However, we also maintain a portfolio which has income as one of its priorities, explains Jim Powell, editor of Global Changes & Opportunities Report.

With interest rates now on an upswing, we need to include more stocks that offer a blend of rising income and growth. Some income stocks benefit from the inflation that usually accompanies interest rate hikes.

Those companies can raise their payouts year after year and keep their shareholders abreast of interest rate and inflation increases.

One such company is Senior Housing Properties Trust (SNH), a REIT that invests in retirement residences, medical facilities, and other operations that cater to retiring Boomers.

The number of Americans aged 65 and above is expected to reach 20 million by 2030. The number of more elderly Americans – the first wave of the Boomers — is increasing even faster. It’s clear that catering to the needs of older people is still a growth industry.

As is true of almost all real estate, the value of senior housing and medical facilities rises during inflation — and so does the rental income they generate. As a result, I expect Senior Housing to do well for many years.

Lastly, Senior Housing is paying a very attractive 7.84% dividend. That’s over three times the 2.59% rate on 10-year bonds, and over four times the 1.94% current yield of the S&P 500.

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