A Baby Boomer Business

HCP (NYSE: HCP) is a real estate investment trust (REIT) that owns and manages health care properties — particularly senior housing, life science facilities and medical offices. Over the past year and a half or so, HCP has been executing a transformation plan — spinning off its riskiest assets, paying down debt and reducing its reliance on its largest tenants — and as a result, the company is leaner and more focused, with excellent asset quality. Indeed, Standard & Poor’s recently upped its credit rating for the company, citing a “positive outlook.” The ongoing retirement of the baby boomer generation is forecast to cause a surge in senior citizens, and HCP is now well positioned to take advantage of the expected growth in senior-focused health care over the coming decades. Between 2020 and 2030, the 65-and-older cohort of Americans is expected to grow by about 30 percent, topping 70 million people. More older Americans means more demand for senior housing and medical facilities. HCP was the first health care REIT added to the S&P 500 index. It’s a high-yield dividend stock, recently yielding 5.5 percent, and it has a reasonable payout ratio for its industry. With demographic trends on its side, HCP is investing in high-quality health care properties, growing responsibly, and generating a predictable and increasing income stream for shareholders. It looks like a stock you could hold for a long time.