How To Profit From Changing Demographics Around The Globe

A few weeks ago, at our Cabot Wealth Summit, I introduced my new book, Making Money Buying and Selling Stocks, a nice primer for those new to the investing arena.

The book includes a section on determining which sectors and trends might offer the most profitable investing potential. In preparing for our Summit, I put that to good use, focusing on the current catalysts that might suggest the next exciting investment ideas. And that research led to the identification of these five Key Demographic Trends that I believe will provide the next great investing profits:

• Aging of the Population
• Millennials
• Immigration
• Environmental, Sustainable, and Governance (ESG) Investing
• Technology

These five trends will dramatically change the face of our nation and offer tremendous investment opportunities in the next few years. All of these trends are important, but the two that I think will generate immediate investment opportunities are Aging of the Population and Millennials.

We have never been Older!

Here are some interesting facts about the graying of not just America, but the world:

• By 2040, the number of people older than 65 is expected to increase to 21.7% of the U.S. population, up from 14.9% in 2015.
• The median age of the worldwide population will rise in many countries globally as
  • Fertility rates—the average number of children born per woman—decline
  • Longevity increases, just as the massive generation born after World War II retires.
• Between 2015 and 2030, the global population aged 65 and older is projected to grow by more than 60% compared to working age population growth of 14%.
• By 2020, for the first time in human history, people aged 65 and over will outnumber children under age five.

Another shift that will provide investing potential is the urbanization of the older generation.

• Between 2000 and 2015, the aged 60+ population increased by 68% in urban areas versus 25% in rural areas, globally.
• The 60+ population living in cities increased from 51% in 2000 to 58% in 2015, and the 80+ population living in urban areas increased from 56% to 63% over that time frame.

All this—plus the fact that more than 70% of our country’s disposable income is controlled by folks 65 and older, who also spend around $4 trillion per year—will result in some exciting prospects for investors in the coming years.

Sectors that will Benefit

My research pointed to several sectors that will grow due to the aging of America, including:

1. Senior Living Facilities
2. At-Home Health Care
3. Convenience Products
4. Drugs
5. Medical Devices
6. Urban Transportation
7. Wealth Management
8. Investments with Yields

In searching through these sectors, I found several stocks that I think fit the bill to profit from this aging trend.

These Stocks will help Alleviate the Pain of Aging

HCP
, Inc. (HCP) is a Real Estate Investment Trust specializing in life science, medical office and senior housing. 23,350 professionally senior housing and nursing care communities with 25 or more beds in the U.S. The market value of the industry is approximately 469.2 billion and has more than doubled in the last decade.

HCP has one of the largest and most diversified portfolios in the senior housing REIT space. The stock is trading at a P/E of 17.2 and pays an annual dividend yield of 4.23%.

Smith & Nephew
plc (SNN) is all about joints. The company’s products include sports medicine joint repair surgical products; arthroscopic enabling technologies for healthcare providers; trauma and extremities devices—both internal and external devices; and advanced wound care products. Orthopedics are a $36.1 billion global market, expanding as the world ages.

SNN sells its products in more than 100 countries. The shares trade at a P/E of 30.1 and have a current annual dividend yield of 1.5%.

Sun Communities, Inc. (SUI) is also a REIT that operates 382 manufactured home and RV communities comprising over 133,000 developed sites in 31 states and Ontario, Canada. The company beat analysts’ earnings estimates by $0.15 last quarter and is expected to grow by 34.9% this year. It pays an annual dividend yield of 2.08%.

Amedisys Inc. (AMED) operates in the home health, hospice and personal care arenas, through 472 care centers in 38 states. It provides skilled nurses, physical and speech therapists, occupational therapists, social workers, and aides for its home health and personal care patients, and its hospice segment assists those patients suffering from terminal illnesses. The company beat analysts’ earnings estimates by $0.22 last quarter, and it’s continuing to gain analyst coverage—a good omen for price acceleration.

The Millennials are Overtaking the Baby Boomers!

While we Baby Boomers (born between 1946-1964) growing older will offer many investment properties, another segment of the population is poised to overtake the boomers this year, offering increasing investment potential. That group is the Millennials (born between 1981-1996). The U.S. Census Bureau predicts that the Millennials population will surpass the boomers in 2019, growing to 75 million, while the boomers decline to some 72 million. Millennials comprise 25% of the U.S. population, and 27% of the global population.

Source: www.kkr.com

Asia accounts for the largest segment of Millennials, about 58% of total Millennial population, and in absolute terms, India, China, the U.S., Indonesia and Brazil have the world’s largest millennial populations.

And the Millennials are pretty well-heeled. It is estimated that $7 trillion will pass through their hands between 2017-2020. That’s a lot of spending power!

And like the older folks, Millennials are also migrating to urban areas, particularly to southern and western cities. In fact, over the past 10 years, college student migration has been highest to Texas, Georgia, Arizona and North Carolina.

Millennials are generally more focused on value, experiences, sustainability and technology. And they are less likely to own homes and automobiles. Consequently, they will create considerably different investment opportunities than the boomers.

Sectors that will Benefit:

• Infrastructure
• Apartment rentals (REITs)
• Ride-sharing
• Travel & Leisure
• Healthy, higher quality food
• Technology

Millennial Spending Power should Boost these Stocks

Here are several stocks that I think hold significant opportunity to benefit from the growing Millennial population.

Equity Residential
(EQR) is a Real Estate Investment Trust (REIT) that specializes in rental apartment properties located in urban and high-density suburban markets The REIT operates in key metro areas with booming populations, including Boston, New York, Washington, D.C., Seattle, San Francisco, Southern California and Denver. In all, EQR counts 309 properties with 79,624 apartment units in its portfolio.

The shares have an annual dividend yield of 2.67% and four analysts have recently increased their earnings estimates for next quarter.

Facebook
, Inc. (FB) has certainly had its share of problems with its privacy and advertising challenges. But the stock has fallen from its highs and the company is still expecting to grow by

51.3% next year. While everyone loves to hate the big dogs, there’s no reason to think that Facebook is going anywhere but up.

Alphabet
Inc. (GOOGL), like Facebook, has proven it has staying power. The company beat Wall Street’s estimates by $2.91 per share last quarter, and continues to post double-digit growth. I wouldn’t bet against it.

Starbucks
Corporation (SBUX) is another stock that young folks sustain. According to a study last year by money app

Acorns
, the average 25-34 year-old spends $2,008 per year on coffee! That’s $5.50 per day, the price of a decent vacation, or gasp—a nice deposit into your IRA.

Starbucks opened 219 net new stores in the second quarter of this year and its earnings surpassed analysts’ forecasts by $0.06 per share. It even pays an annual dividend yield of 1.58%. And double-digit growth continues to be the norm for this coffee shop.

Both the graying population and the rising Millennial generation come with diverse strategies for profitable investing in growth companies. There are many more stocks that will benefit from these trends, but I hope that these ideas will give you an entrée to profiting from investing in these key demographic developments.