The growth of seniors in Canada has significantly outpaced the growth rate of the broader population. Investors should be paying close attention to this shift in demographics.
Not only will it have major impacts on Canada’s economic, political, and social fabric, but there are big investment opportunities that will emerge as a result of this change.
Today I want to look at two stocks that are well-positioned to win big in the coming decades on the back of Canada’s aging population. Demand will rise steadily for senior living residences and long-term care facilities in this environment.
The level of care required for Canada’s burgeoning senior population will be unprecedented, and much of the burden will fall on the private sector to fill that need. I love these stocks as a long-term pick up in a Tax-Free Savings Account. Let’s dive in.
Sienna Senior Living
Sienna Senior Living (TSX:SIA) is a Markham-based company that owns and operates senior living residences. Shares of Sienna have climbed 20.8% in 2019 as of early afternoon trading on November 15. The stock has dropped 6.2% over the past month.
Investors got a look at its third-quarter 2019 results on November 13. Revenue increased 1.8% year over year to $167.9 million in that period. Average occupancy in Sienna’s long-term care portfolio stood at a healthy 98.2%.
Sienna finished the third quarter with a debt to gross book value of 46.5%, which was down 180 basis points year over year. Debt to adjusted earnings before interest, tax, depreciation, and amortization (EBITDA) dropped to 6.6 years from 6.9 years and weighed average cost of debt fell 20 basis points from Q3 2018.
In the year-to-date period, Sienna has posted adjusted funds from operations (AFFO) of $72.3 million, which is up 1.4% from 2018. Revenue has also climbed 5.3% to $497.6 million. Sienna stock last paid out a monthly dividend of $0.078 per share, representing a 5.1% yield. Shares of Sienna last had an relative strength index (RSI) of 37, putting it just outside of technically oversold territory.
Extendicare
Extendicare (TSX:EXE) operates long-term care facilities across North America. Its stock has climbed 39% in 2019 at the time of this writing, and has provided solid capital growth and strong income for its shareholders over the past decade. Extendicare released its third-quarter 2019 results on November 7.
The company recently opened a 124-suite retirement community that bolstered its living capacity in fiscal 2019. Revenue rose 0.9% year over year to $282.7 million while adjusted EBITDA fell $0.8 million to $24.4 million. Extendicare encountered headwinds in the form of higher administrative costs.
Shares of Extendicare are still trading at the high end of its 52-week range. The stock had an RSI of 38 as of early afternoon trading on November 15. This puts it in range of technically oversold territory as the stock has also suffered from a retreat since posting 52-week highs in the middle of October. Extendicare last paid out a monthly dividend of $0.04 per share. This represents a 5.6% yield.
