The Dividend Investor v.30 ”2 winners on megatrenden”


A lot has happened with the world and society in the last hundred years, big things like wars and important inventions. Many small things together have resulted in major changes in the really long term. In developed countries, man has been given a significantly higher standard of living and countries that were previously pure U-countries have scored it better. We have mobile phones and are connected almost wherever we are. Self-driven cars is not something taken out of a science fictionfilm but a reality even if it is in an early stage.

The last hundred years has brought great changes and it would be naive to believe anything else even if the next hundred years. That the investors can make investments in order to take part of the development and potential in the long term. Thoughts go quickly to the tekniktunga companies, and the imagination around the inventions they might come up with in the future.

However, it must not look to the most risky or tekniktunga companies in order to ride in the future, there are the usual ”tråkbolag” who is the winner in the future and something that is called a megatrend.
A megatrend is that we the people are becoming older and older and the old are a growing part of the population. A development that is expected to continue for decades. At the same time increasing the world’s population is steadily increasing and by 2050 is expected to be near 10 billion people here on earth, compared with around 7 billion now (Source CNBC). In Sweden there were at the end of december 2015 less than 2 million people aged 65 and over. By the year 2025, this age group increased by approximately 16 percent while the population as a whole is expected to increase by approximately 12 per cent in Sweden (Source SCB).

Prosperity is increasing, the population of the world increases and we live longer. This is a good basis to start from in the hunt for the winner on this megatrenden.

A company that is a winner in this development is the Swedish Essity. You might not have heard about it and the reason is that it recently spun off from SCA. Essity manufactures tissue paper, baby diapers, incontinence products etc, and is an international player that has a lot to win on this megatrenden. Incontinence care is a product for the elderly and with a steadily growing number of elderly are increasing the market and the potential for Essitys sale. To the population increase also means a general increase in the demand for personal care products. An additional factor that weighs in to the company’s advantage is that prosperity is increasing, more advice and the opportunity to buy diapers, feminine care products, etc

Essitys score is not low but also not a deterrent in a long-term perspective with this megatrenden in mind in addition. Assuming a profit of just over sek 10 per share and a dividend of sek 5 per share in 2017 is the p/e and dividend yield in the course 233 crowns; 23, respectively, 2.1 per cent. Both earnings and dividends are expected to rise in the next few years speaking to analysts estimates. With megatrenden in mind, it is likely that Essitys profits and dividends steadily ticking up for many years in the future, to the year 2050 and the past. An attractive aspect of the company in addition to megatrenden is also that it is a good konjunkturokänsligt. We buy toilet paper, tampons, diapers etc no matter if there are tough times. Far as much else, we save up before we skip to buy toilet paper!

Northwest Healthcare Properties is a real estate company listed in Canada with a focus on health care properties in several countries around the world. The company owns 141 st real estate in Canada, Brazil, Germany, Australia and New Zealand. In Canada, the company is the largest after the state focusing on health care properties. The form of a REIT, like most real estate companies in the united states and Canada and it works as so that the company is exempt from taxes if they distribute on the lion’s share of their revenue in the form of dividends to the owners. Then reported earnings contain a lot of way the accounting things use the ratio and the term Fund From Operations or SEAT as it is called, instead of EPS or earnings per share. SEAT is roughly the cash flow from the properties. Northwest Healthcare Properties has a dividend payout ratio of approximately 81% of AFFO (Adjusted SEAT) and a leverage of approximately 40 %. Very healthy numbers for this type of company. The net asset value is 12,55 USD and the stock is trading at 10.8 million CAD, which gives a discount of 14 percent. The dividend that is paid on a monthly basis is a total of 0.8 USD per year, implying a dividend yield of 7.4 percent. The dividend has remained at 0.8 USD per year in several years, so there is no dividend growth to speak of but with a sky-high dividend yield goes anyway.

Northwest Healthcare Properties with its healthcare properties are benefiting from megatrenden in an increasingly older and larger population. The increasing part of the elderly driver on the demand of the services carried out in the buildings the company owns. Good demand and sound finances, should result in continued very good dividends from the company.

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