Wednesday, August 16, 2017

Old People = Money

With advances in medicine, Americans are living longer and longer. However, this comes with a cost. Alzheimer’s, cancer, diabetes, etc. can require long term treatments. Many seniors will spend years in nursing facilities. Without major reform, expenses will skyrocket. But by playing your cards right, those expenses will become your profits.

Pharmaceuticals will be one of the beneficiaries of the aging population. When they are the only source for a life-saving treatment, the sky’s the limit for what they will charge. (Side note: drug companies make their money on treating diseases, not curing them.) There are ‘safe’ companies like Johnson & Johnson (NYSE:JNJ) that tend to rise steadily and offer a good dividend. Bristol-Myers Squibb (NYSE:BMY) has seen a pullback in the last year and might offer opportunities for future growth. Many of the smaller companies can be very volatile, popping or dropping with the results of a clinical trial. Picking up a pharmaceutical ETF can be a great way to gain exposure without taking on too much risk.

Dividend investors may want to take a look at Omega Healthcare Investors Inc (NYSE:OHI). This company is a REIT that provides leases / mortgages to skilled nursing facilities and assisted living facilities. At the time of writing, they offer a juicy 8%+ dividend. The share price has been coming down from its highs in 2015, which could actually be seen as a benefit for someone getting in now. Be aware, however, that any reduction to the dividend could be disastrous to this stock.

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