Looking ahead to 2020, investors have good reason to move toward safer investments. Economic headwinds like slowing growth and trade uncertainty continue to weigh on markets at a time when stocks trade at all-time highs.
One of the most secure ways to invest your money right now is in assets that cater to industries with rock-solid fundamentals - ones that can weather any economic storm on the horizon.
For this, look no further than healthcare facilities that cater to older Americans.
Over the next two decades, the U.S. senior population age 75 or older will double, according to the U.S. Census Bureau.
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This simple fact puts companies in charge of critical services like healthcare, lodging, outpatient clinics, and other medical care in the driver's seat.
In fact, the National Investment Center for Seniors Housing & Care states that the United States is well undersupplied when it comes to these facilities.
One of the key demographics in this space is Americans over the age of 80. According to the Milken Institute, the average per-capita spending on healthcare by Americans over 85 is $32,900 per year. For comparison, the average American only spends $13,700.
Meanwhile, housing for this demographic remains in short supply.
A new NIC study shows that existing supply of 80-plus housing sits at 1.592 million units. By 2040, the United States needs to see the number of units increase by 986,000 in order to meet expected demand. By 2030 alone, America needs to add 881,000 new units.
With healthcare spending on the rise and demand for facilities expanding, this industry looks recession-proof heading into the next decade.
So today, I'll show you the best way to tap into these trends - and the name of the best REIT for 2020 and beyond.
The Best REIT in Healthcare for 2020
Investors can speculate on the next "life-saving" drug or device that might prolong life by a few weeks to a year. But those types of investments are vulnerable to volatility and likely trade at nosebleed multiples in today's market.
Instead, investors should be looking for better ways to tap into healthcare and secure steady, reliable income to weather the storm.
For this, look no further than real estate...[mmpazkzone name="in-story" network="9794" site="307044" id="137008" type="4"]Real estate investment trusts (REITs) come with a management team that handles the details of real estate property ownership so you don't have to.
They also come with unique tax advantages, like the 20% deduction you receive on passive income.
In the healthcare sector, there is no better REIT today than Welltower Inc. (NYSE: WELL).
This $34 billion real estate giant will flourish as a result of the aging population and demand for healthcare facilities. It owns the world's largest health and wellness real estate platform.
Welltower is the nation's largest REIT with an exclusive focus on healthcare. It owns and operates more than 1,500 healthcare properties in Canada, the United States, and the United Kingdom. This includes 1,300 senior living communities and 22 outpatient clinics.
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One of the most important things to consider is the structure of the firm's deals.
Large healthcare providers like Sagora Senior Living, Senior Resource Group, and Sunrise Senior Living lease properties from Welltower under reliable, long-term contracts. This ensures steady cash flow and taps into the continuous trend of aging Americans turning to Welltower's clients.
This results in a very strong balance sheet with stronger returns. WELL maintains a strong credit rating of BBB+ and has returned 71% gains to investors over the last five years.
It also enjoys something that all investors should seek when it comes to the safety of their investments.
Welltower's industry has incredibly high barriers to entry, making it very difficult for new competition to enter the market. This helps protect market share and enables the firm to be a leader as demographics shift and demand rises.
Pick Up Shares of WELL Now
Currently, Welltower REIT trades for roughly $83.50 per share.
However, this company has a potential upside over the next 12 months of $115.
Combine a 4.5% dividend with a price target that represents 37.7% upside, and you're tapping into a market-beating investment for the year ahead.
With solid demographic tailwinds combined with an extraordinary growth thesis, Welltower stands to become one of the top-performing REITs over the next decade.
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About the Author
Garrett Baldwin is a globally recognized research economist, financial writer, consultant, and political risk analyst with decades of trading experience and degrees in economics, cybersecurity, and business from Johns Hopkins, Purdue, Indiana University, and Northwestern.