The ‘ageing population’ is a just one investment thematic that has become increasingly important over the last decade and for good reason.
According to the Australian Bureau of Statistics (ABS), the proportion of Australia’s population aged over 65 years has grown from 8% in the 1970’s to more than 14% in 2014. This proportion is projected to increase to between 23% and 25% over the next 40 years and, at the same time, the proportion of people aged under 15 years is projected to decrease from 19% in 2007 to 15% in 2056.
Australians are living longer. In the 60’s, the average life expectancy was around 68 years, today it is 78 years and in 2042 it is expected to be around 83 years.
But this is not a phenomenon unique to Australia’s population. In fact, the global population is ageing at a similar rate as the graph below shows.
Although there are a number of large multinational companies that stand to benefit from this tailwind, there are also a number of Australia-based companies that could be long-term winners.
Here are five companies that stand to benefit as Australia’s population gets older:
Challenger Ltd (ASX: CGF) – Challenger is Australia’s leading provider of annuity products that convert retirement savings into secure retirement incomes. These are likely to become more popular as a result of future regulatory changes, and also as investors seek less volatile investments.
Gateway Lifestyle Group (ASX: GTY) – Gateway Lifestyle is a provider of affordable community living housing for seniors through land lease communities and manufactured home estates. This essentially involves the resident owning their own home with the operator keeping ownership of the land and receiving a rental income stream in return. Gateway Lifestyle currently operates 53 communities with plans to acquire more in the future.
Ramsay Health Care Limited (ASX: RHC) – As people get older, a greater proportion of the population will require hospitalisation at some point and Ramsay will be at the forefront in providing these services. Public sector budgets will also struggle to finance ever-increasing healthcare costs and this will see private hospital operators like Ramsay play a more important role.
Flight Centre Travel Group Ltd (ASX: FLT) – There is a growing trend for retirees to enjoy their freedom and to travel to different parts of the world. This is especially the case for cruising and Flight Centre is one of the leading providers of cruise packages in Australia.
InvoCare Limited (ASX: IVC) – Australia’s death rate has been around 1% over the past decade but this is expected to increase to 2.7% by 2033 as more of our ‘baby boomer’ generation begin to pass away. As Australia’s leading funeral provider, InvoCare will be well placed to meet the future demand created by this trend.
The ageing population thematic is a long term story and most companies are likely to encounter some short-term headwinds that will see their share prices stumble at some point in the future.
It is at precisely these times that investors should look to take advantage of any short-term weakness and, investors who remain patient might be rewarded.
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Motley Fool contributor Christopher Georges has no position in any stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.