Market Trend #2: The Silver Tsunami
Our second market trend is the “silver tsunami.”
Click to EnlargeThe aging of the Baby Boomers is the biggest demographic event since their birth in the 1950s and ‘60s.
Looking at the chart, there were 21 million Americans aged 65-74 in 2010. There will be 40 million by 2050. The number of Americans aged 75-84 will more than double by 2050, and what’s really astounding is that the population over 80 years old will triple in the next 40 years. That means one obvious thing — and it’s a bet, not a gamble. Demand for healthcare will soar over the rest of your lifetime and mine.
Although healthcare is a big challenge for this country, it’s a field where you have people looking for solutions. These are the people you want to invest with.
Ventas (VTR) is my top pick in this space. It’s a REIT that operates senior housing, both independent- and assisted-living, as well as some nursing homes, medical offices, and a small slice of hospitals. Their bread-and-butter is senior housing. Ventas focuses on people who can pay out of their own pocket. Some senior-housing providers that cater to Medicare and Medicaid recipients may also thrive in the years ahead, but it’s a dicey situation because the government can simply cut the rates at any time.
Ventas, in contrast, gets 87% of its income from private-pay clients. This REIT focuses on affluent communities, which is a great business model for us. VTR doesn’t carry as high a dividend as some other healthcare plays, but I want safety. The stock currently yields 4.5%.
