In line with Statistics Canada, the senior inhabitants accounts for nearly 20% of the entire inhabitants. By 2030, it’s estimated that seniors may signify as much as 23% of the inhabitants. And, in line with the Canadian Institute for Well being Data, the 75 and older age group will double by 2037. Chartwell Retirement Residences (TSX:CSH.UN) is a dividend inventory that can profit significantly from this.
Let’s check out why I feel that Chartwell is an effective inventory to show to to your revenue wants.
A dividend inventory with constructive long-term secular tendencies
Chartwell is Canada’s largest supplier and proprietor of seniors housing communities, from unbiased dwelling to long-term care. This clearly units it as much as profit significantly from the getting old inhabitants.
This getting old inhabitants is a macro development that’s right here to remain. It’s a long-term, secular development development that has been a relentless theme of late, and it’s accelerating. Within the final 20 years, Canada’s senior inhabitants elevated 75%. Within the subsequent 20 years, this inhabitants is predicted to extend 68% to 10.4 million Canadians.
This has been one of many important drivers for Chartwell’s sturdy historical past. As you may see from the value graph beneath, Chartwell’s inventory value has elevated virtually 50% within the final 10 years.
Whereas this isn’t the most effective, Chartwell additionally paid out a dependable and rising dividend over this time interval. The truth is, the corporate paid out virtually $7 per share in dividends within the final 10 years, and its dividend grew by 15%.
Take into account that Chartwell’s enterprise is a capital-intensive one, and that the pandemic years have been significantly exhausting on this firm for apparent causes. But, the dividend grew within the final 10 years regardless of these troublesome realities.
Chartwell builds momentum
Again in 2018, Chartwell laid out a strategic plan to enhance the enterprise. The corporate’s objectives included growing resident satisfaction in addition to enhancing occupancy ranges to 95%. As beforehand talked about, Chartwell had a really troublesome few years throughout the pandemic. This meant that these objectives have been in danger.
So whereas Chartwell is behind on these said objectives, occupancy hit 91.5% within the first quarter of 2025. And it’s anticipated to hit 95% by the top of the 12 months. That is no small feat, and one which has been pushed by each the macro tendencies I mentioned and administration’s advertising and marketing and promoting. For instance, Chartwell held open home occasions and webinar collection to drive curiosity and referrals.
What’s subsequent for this dividend inventory?
The long-term development tailwinds are sturdy they usually proceed to be headed in the correct path for Chartwell. This, as administration says, is the start of a long-term secular development that can final for many years.
Proper now, the availability/demand atmosphere for senior dwelling is beneficial for Chartwell Retirement Residences. There are merely not sufficient suites to satisfy the demand of the getting old inhabitants. To get to a place of equilibrium, administration estimates that 200,000 suites would should be constructed within the subsequent 10 years. That’s virtually 3 times the variety of suites constructed within the final 10 years.
This dynamic will assist sturdy occupancy charges, increased earnings, and better pricing. In flip, all of this can assist Chartwell’s money flows, earnings, and naturally, dividends paid. For my part, this dividend inventory has many extra years of dividend funds and development. It may be relied upon for revenue, now and into the long run.
