According to the Australian Bureau of Statistics approximately 15.3% of the Australian population is over 65 years of age. This is expected to rise considerably over the next two decades due to lower birth rates and longer life expectancies.
Whilst there are a number of companies that stand to benefit from Australia's ageing population, three in particular stand out for me. Here's why I think they could prove to be great long-term buy and hold investments.
Japara Healthcare Ltd (ASX: JHC)
Of all the aged care operators available to investors, I believe Japara is by far the best option there is. Management plans to meet the growing demand for aged care facilities by delivering over 2,500 new places by 2025. I believe this will provide the company with strong growth for the next decade, which more than justifies paying 19x trailing earnings to own its shares. Whilst this may be a premium to Estia Health Ltd (ASX: EHE), I believe it has significantly better prospects than its rival.
Lifestyle Communities Limited (ASX: LIC)
Lifestyle Communities provides accommodation for working, semi-retired, and retired people over the age of 50. The company has 13 sites in Victoria and will have 2,445 homes under management once construction completes. Approximately 59% of these homes are currently occupied, with six of its sites completely sold out. As well its existing portfolio providing growth, management intends to accelerate growth by completing at least one acquisition each year. I believe demand for its communities will grow over the next few years, which could make it worthy of a closer look today.
Ramsay Health Care Limited (ASX: RHC)
This private hospital operator stands to be a big winner not just from Australia's ageing population, but from ageing populations across the world. Through its 223 hospitals worldwide Ramsay admitted over 3 million patients, performed 1.5 million operations, and delivered 63,000 babies in FY 2016. As well as ageing populations, management expects an increase in chronic disease burden and improvements in treatment and diagnostic methods will mean demand for its services continues to remain strong for the foreseeable future. I believe Ramsay is positioned perfectly to provide investors with above average earnings growth, making it a great buy and hold investment.
