In accordance with Statistics Canada, the senior inhabitants accounts for nearly 20% of the entire inhabitants. By 2030, it’s estimated that seniors may symbolize as much as 23% of the inhabitants. And, in accordance 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 drastically from this.
Let’s check out why I feel that Chartwell is an effective inventory to show to on your earnings wants.
A dividend inventory with constructive long-term secular traits
Chartwell is Canada’s largest supplier and proprietor of seniors housing communities, from impartial residing to long-term care. This clearly units it as much as profit drastically from the growing older inhabitants.
This growing older 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 robust historical past. As you possibly can see from the worth graph beneath, Chartwell’s inventory worth has elevated nearly 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 nearly $7 per share in dividends within the final 10 years, and its dividend grew by 15%.
Remember that Chartwell’s enterprise is a capital-intensive one, and that the pandemic years have been notably 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 targets included growing resident satisfaction in addition to enhancing occupancy ranges to 95%. As beforehand talked about, Chartwell had a really troublesome few years in the course of the pandemic. This meant that these targets have been in danger.
So whereas Chartwell is behind on these said targets, 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 traits 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 robust and so they proceed to be headed in the fitting course for Chartwell. This, as administration says, is the start of a long-term secular development that can final for many years.
Proper now, the provision/demand surroundings for senior residing is beneficial for Chartwell Retirement Residences. There are merely not sufficient suites to satisfy the demand of the growing older 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 nearly 3 times the variety of suites constructed within the final 10 years.
This dynamic will assist robust occupancy charges, increased income, and better pricing. In flip, all of it will 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 earnings, now and into the longer term.
