These dividend stocks will benefit from AI and an aging population, Jefferies says

Jefferies Highlights Dividend Stocks Set to Gain From AI Growth and Demographic Shifts

Imagine if a retirement home could run as smoothly as a well-organized school, where every teacher knows exactly what each student needs. That’s what’s happening as senior housing companies start using artificial intelligence (AI) to help take care of older adults.

Why Investors Should Care

Senior housing is getting a big upgrade thanks to new technology. With more people getting older—especially as baby boomers turn 80—there’s growing demand for these homes. But investors want to know which companies will do the best job using AI to make more money and save on costs.

Bull Case: The Upside of AI in Senior Housing

  • Better Decisions: AI helps companies decide how much to charge for rent, where to spend money on ads, and how to fill empty rooms faster.
  • Lower Costs: Computers can spot patterns and help managers save money, which boosts profits.
  • Leading Companies: Welltower, for example, has built its own AI systems for over ten years and now uses tools like OpenAI to get even smarter. The company’s stock is up more than 12% this year, and it pays a 1.4% dividend to investors.
  • Growing Partnerships: Welltower now licenses its AI platform to other big companies, like Public Storage, which means more ways to make money.
  • New Players: American Healthcare REIT is another company using AI and offering a 1.9% dividend. It’s seen as a top pick for the aging population, with its stock also rising about 12% in 2024.

Bear Case: The Risks and Challenges

  • High Costs: Building advanced AI systems isn’t cheap. Welltower has spent hundreds of millions of dollars, and not every company can afford that.
  • Unproven Long-Term: While AI looks promising, it’s still early days. There’s no guarantee these systems will keep working as well as hoped.
  • Industry Tradition: Real estate has always been a “gut-feel” business, and some managers might resist trusting computers over their own experience.
  • Competition: As more companies adopt AI, it may get harder to keep a big advantage for long.
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What the Numbers Say

Welltower owns over 2,500 senior and wellness housing communities. The global senior housing market is expected to grow by more than 5% per year through 2030, according to Grand View Research. That’s a strong tailwind for companies that can use technology well.

Also, a study from McKinsey shows that companies using AI in real estate can see operating income rise by up to 15% compared to those who don’t (source).

Investor Takeaway

  • Watch for tech leaders: Companies like Welltower and American Healthcare REIT are worth watching if you want exposure to AI in senior housing.
  • Check the dividends: Both companies pay steady dividends, which can help smooth out returns for investors.
  • Balance risk and reward: AI can offer big rewards, but it costs a lot to build and isn’t a sure thing yet.
  • Look for growth: An aging population means more demand for senior housing, so companies using technology smartly could grow fastest.
  • Diversify: Don’t put all your eggs in one basket—spread investments across different sectors and companies, especially in new tech areas.

For the full original report, see CNBC

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