An Investment to Die For
Are there any undervalued income opportunities left?
We thought the market correction would have driven up the yield on many investments that fit our criteria. But prices are still high given investors’ flight to safety. However, when we started to focus on fundamental, eternal drivers of growth, we did find one long-term investment we like, and we’re adding it to our Aggressive Portfolio.
One of the core areas that we have recommended for the long-term is health care.
Not to be macabre, but all these new drugs and treatments will reduce pain and prolong life, the sad truth is that death will always be the final result. And that inevitability offers a solid, long-term investment trend beyond healthcare.
According to the AARP Public Policy Institute, the $20 billion death care industry, which performs nearly two million funerals and burials per year, has been consolidating. And as the big players grow bigger, more can pay higher and steadier dividends.
And according to the National Center for Health Statistics, the death rate is is expected to rise at a rate of 1% annually.
Even as the number of deaths may be increasing, so is the cost of a funeral. By some estimates the cost has risen 1,328% in four decades so that today the average price tag is $8,000 to $10,000. This has made traditional funerals less popular.
However, there are death care services companies that have been able to consolidate and cut costs while selling cheaper services such as cremation services (42% of people are cremated) to offset the slowing in traditional funeral services.
We believe the consolidation that has occurred already allows some firms to be market leaders in certain segments, such as in the making of funeral products, which is still lucrative.
In the subscriber section, we profile on the world’s biggest casket makers whose time has come.