Profit Opportunity: The Baby Boomers’ Last Spending Spree

Don’t even try to guess what the next big winner will be in the health care sector. Nobody knows which pharmaceutical company will come up with a blockbuster drug. Or which insurance company will benefit most from the new health care bill.

But you can make big profits by betting on just one thing: that the demand for health care will continue to increase. With the investment I mentioned yesterday, I believe you can make 10%+ gains and grab a 5%+ dividend every year for the foreseeable future.

As I said, the baby boomers are going to swamp the health care industry for the next 20 years.

So it makes sense to ride the coattails of this mega-trend.

And one of the easiest ways to do it is by investing in a health care REIT (real estate investment trust). Health care REITs own properties like senior housing, hospitals, skilled nursing facilities, and medical office buildings. And, like all REITs, they must pay out 90% of their taxable income in the form of dividends.

Why do I like REITs so much?

The main reason is that, because they own the health care facilities, they get paid no matter who the patient uses for insurance, what company manufactures their medication, etc.

And most of their properties are leased to health care providers for long periods of time, usually 10 to 15 years. So health care REITs aren’t as worried about economic swings as, say, shopping mall REITs would be. If the economy drops, their retail tenants may go out of business. But because health care is virtually recession-proof, and their leases tend to be long-term, the health care REITs have a much more stable revenue stream.

The increasing demand for health care over the next 20 years means there will be an increasing need for more locations to deliver health care services. And with only 10% of health care real estate already owned by REITs, there’s much more room for these REITs to grow.

But as an investor, you don’t just get a great growth story. Because REITs have to pay out 90% of their income as dividends, you get a nice dividend check every quarter. And the yield on health care REITs (most average over 5%) is higher than that of most other investments.

Growth and income. The best of both worlds.

Today, in the Liberty Street Investor, I am releasing my pick for the best health care REIT to invest in. To join the Liberty Street Investor and gain access to my portfolio (and this month’s REIT recommendation), click here.