The best type of stocks to hold in retirement are ones that you can hold through good times and bad.
I think the best industry that fits this need is the healthcare sector because the population will always have healthcare needs whether there is a recession or not.
Humans will always have a desire for longer and healthier lives with more advanced healthcare techniques. The Australian population is steadily aging thanks to the baby boomer cohort which will boost the number of patients.
Below are two of my favourite healthcare ideas for holding long term:
Sonic Healthcare Limited (ASX: SHL)
Sonic is one of Australia's largest healthcare businesses with a market capitalisation of $9 billion.
Sonic has large overseas operations which gives it a large advantage over its biggest Australian competitor, Primary Health Care Limited (ASX: PRY). It has a presence in New Zealand, UK, Ireland, Belgium, Switzerland, Germany and the USA.
Sonic is always in danger of a government deciding to cut funding for the services Sonic provides, but by operating in several countries it mitigates that risk and gives it many avenues to grow.
Pathology will always be in demand and will become even more useful as techniques improve in time which should see revenue grow more over the years.
In FY16 it grew revenue by 20%, underlying earnings per share by 27% and the dividend by 5.7%. It's currently trading at 18.8x FY17's estimated earnings with a partially franked dividend yield of 3.47%.
Japara Healthcare Ltd (ASX: JHC)
Japara is one of Australia's largest healthcare operators with a market capitalisation of $599 million.
The funding of aged care has been a thorny issue in recent months but that seems to be over for now, although this could crop up again next time the government is trying to cut costs.
Japara is one of the stocks that is most likely to benefit from Australia's aging population. The number of people who will likely use its services is predicted to soar over the next few decades.
In FY16 Japara's revenue increased by 16.4%, net profit after tax increased by 5.6% and the dividend increased by 4.54%. It's currently trading at 19.7x FY16's earnings with a grossed up dividend of 7.27%.
Foolish takeaway
Both of these businesses look like they have long term futures with growing dividends. Out of the two I prefer Japara because it's very closely aligned to Australia's aging population growth. However, these aren't the only stocks for a blue chip retirement, you could also add these stocks for an even safer retirement portfolio.
