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My Top Stock to Own for the Next 10 Years

By Jason Hall - Feb 3, 2021 at 6:05AM

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It's a surprising choice that's easy to overlook. But it's been a winner since going public, and has a massive trend in its favor.

Everyone in the investing world, it seems, is talking about the confrontation between retail investors and Wall Street's wealthy elites. On one hand, the whole thing makes it easy to understand why so many people feel like the system is rigged against them. And to some extent, that's true; the deeper an investor's pockets are, the better the information they have access to, and the faster they can conduct their trades. 

But that doesn't mean regular people can't take full advantage of stocks to build wealth, and there's a much easier way to go about it than trying to trade your way to riches, competing against bigger, better-funded traders that have all the advantages. In this video clip from Motley Fool Live, recorded on Dec. 14, Jason Hall, host of the daily show "The Wrap," explains to Motley Fool contributors Danny Vena and Lou Whiteman why CareTrust REIT (CTRE 0.52%) is his pick for the best stock to own for the next 10 years. With a massive trend underpinning its prospects, investors can buy and hold CareTrust while the company does the hard work, instead of trying to trade their way to wealth.  


Jason Hall: And decided I want to talk about the best stock to own for the next 10 years, and I think you guys are going to be absolutely surprised when I tell you.

Danny Vena: Is this an oil stock?

Lou Whiteman: It's Brookfield.

Hall: It's not Brookfield and it's not an oil stock. [laughs] CareTrust REIT, CareTrust.

Vena: That was my second guess. [laughs]

Hall: I'm sure this was not on a lot of people's radar to come from me, but it's a business that I like a lot. CareTrust REIT, the ticker CTRE, stock is up about 9% last year. That's not a great year considering what a great year for a lot of stocks was, like Etsy, it's up almost 300%. Here's the thing, CareTrust stock is still down 5% from its pre-coronavirus highs and I wanted to just talk a little bit about what's interesting to me about this business.

This is a company that's in the seniors housing and seniors care business. They own a couple hundred, I think it's still less than 300 seniors housing, skilled nursing facilities. They were spun out of The Ensign Group a number of years ago, it was a publicly held separate company. The CEO of CareTrust was one of the co-founders of Ensign Group. This is a business that really understands both the care side and also the property ownership and the property management side of the senior housing industry.

Now, needless to say, it's been a tough year for that industry with the coronavirus crisis. But the next decade-plus is going to be incredibly important for this industry, because we're going to need to deploy substantially more facilities to meet the needs of baby boomers as they age. We're going to end up with the largest population of seniors that this country's ever had, and it's going to continue to grow for really the next 25-plus years.

Here's a key metric for CareTrust. Over the past year, CareTrust has increased funds from operations 32.5%. Funds from operations is the equivalent of earnings per share for real estate investment trusts. This is a company that even through this crisis, has managed to continue to deliver really strong funds from operations growth, has continued to deliver solid, almost double-digit revenue growth. Just acquired a number of properties, has the strongest balance sheet in the industry, has a long history of growing the dividend, let me drop some of this other stuff off here, has a very long history of growing the dividend every year. Over the past five years, it's up 56%. If you adjust that and you look at the dividend yield and what you can buy today, you're getting almost a 4.5% dividend yield with a very long history of growth.

You add all that up and you have a very necessary industry. You have a leader in that industry in terms of their capital allocation approach, the strength of their balance sheets, their size at this point is small, so they should be able to deliver outsize growth in this high-growth industry that delivers substantial cash flow across the cycle. Whatever is going on with the economy, senior care facilities continue to deliver. So that's my pick for best stock to own for the next 10 years.

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Stocks Mentioned

CareTrust REIT, Inc. Stock Quote
CareTrust REIT, Inc.
$17.27 (0.52%) $0.09

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