There will always be some degree of chaos in the world, but one aspect of our quality of life is getting objectively better: life expectancy. Babies born in the U.S. in 2012 had an average life expectancy of 78.8 years, the highest on record, according to a new study by the Centers for Disease Control and Prevention. Let’s take a look at the five best stocks to buy to take advantage of this encouraging trend in life expectancy.
After all, people aren’t just deciding to live longer. With the quality and sophistication of technology and healthcare constantly increasing and compounding on itself, Americans know more about health and how to treat their ailments than ever. Consider that the life expectancies for men and women increased roughly 25 years between 1900 and 2001.
While there are many factors that go into the increasing life expectancy over time, if you’re looking to invest in life-lengthening companies, these are five of the best stocks to buy today:
Best Stocks to Buy #1: Walgreens (WAG)
It may sound odd, but drugstores are a big contributor to the record-high life expectancy Americans enjoy today. The access to FDA-approved over-the-counter and prescription medications that actually work is easier and more convenient than ever thanks in a large part to drugstores like Walgreen (WAG). Investors can take solace in the fact that, with more than $70 billion in sales annually, WAG is here to stay.
Believe it or not, Walgreen is on the forefront of medical innovation. In 2013, it partnered with Theranos, a private company that’s developed a way to dramatically improve blood testing. With the prick of a finger, Theranos’ proprietary technology draws just a drop of blood. Then accelerated, accurate tests can be run for a fraction of the traditional cost. A prime example: Theranos fertility tests are just $35, compared to as much as $2,000 using traditional methods.
On top of that, WAG stock rewards investors with a 2.3% annual dividend.
Best Stocks to Buy #2: Rite Aid (RAD)
While Rite Aid (RAD) hasn’t partnered with anyone that could radically shift the industry, it’s another drugstore chain that isn’t going anywhere. Investors should be conscious of the fact that RAD stock has a much different risk profile than Walgreen. RAD’s market capitalization is $5 billion to WAG’s $57 billion, and Rite Aid doesn’t pay a dividend. But that’s precisely why Rite Aid enjoys more long-term potential, as the company can expand its store base more rapidly than larger rivals.
Another reason RAD stock is attractive: it’s 0.8% net profit margin last year means that a meager 80 basis point improvement would double the company’s earnings.
Best Stocks to Buy #3: Health Care REIT (HCN)
If you’re into dividend stocks, REITs are a great way to play America’s record longevity. Health Care REIT (HCN) is the largest publicly traded senior living real estate investment trust. It buys, manages, and monetizes senior living and health care facilities across the U.S.
As baby boomers age, they’ll increasingly start filling the senior living facilities themselves. Why not hedge those future expenses by guaranteeing yourself a cut of the senior living industry’s profits? Health Care REIT is a savvy way to make that hedge, and with HCN shelling out a 5% dividend each year, it’ll give investors one more reason to celebrate their increasing life expectancy.
Best Stocks to Buy #4: Senior Housing Properties Trust (SNH)
Senior Housing Properties Trust (SNH) is another REIT baby boomers can invest in for exposure to the senior care boom. Similar to the dynamic between Rite Aid and Walgreen, SNH is much smaller than Health Care REIT, but both are good ways to play longevity in America. Unlike RAD stock, however, SNH pays a sizable dividend — 7.3% annually.
With that amazing dividend yield and a record of increasing its dividend consistently for the last four years, SNH stock should have income investors frothing at the mouth. But don’t just take my word for it: Charles Sizemore, Editor of Macro Trend Investor, named SNH and HCN two of the top three senior housing REITS to fund your retirement last month.
Best Stocks to Buy #5: Pfizer (PFE)
The $181 billion pharmaceutical giant Pfizer (PFE) is another fine stock to buy as U.S. life expectancy reaches all-time highs. Easily the largest company on our list, Pfizer is one of the most established healthcare names on the planet. Many future medical breakthroughs will probably come from Pfizer and companies like it — titans in their field who can afford the smartest scientists and best technology in the world.
PFE spent $6.7 billion on research and development last year, and had a whopping 279 different projects going on at year’s end. The company will almost certainly continue to help improve the health of Americans into the future. Not surprisingly, PFE is also a nice dividend stock, boasting a dividend yield of 3.6%.
As of this writing John Divine held no positions in any of the stocks mentioned. You can follow him on Twitter at @divinebizkid.