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This article was updated May 10, 2016.

It's a fantastic time to be a senior healthcare housing landlord. In fact, thanks to the aging of the population, it's not a bad time to take a close look at senior living stocks.

The entire industry has a strong outlook, since the largest generation in U.S. history is now retiring en masse. For the next 18 years, a staggering 10,000 baby boomers will turn 65 every day, increasing demand for everything from golf clubs to assisted living facilities.

Consolidation and mergers and acquisitions are also thriving in home healthcare. Let's look at three potential winners with respect to market drivers, restraints, and opportunities.

HCP (NYSE: HCP)
HCP is a real estate investment trust, or REIT, focused exclusively on the healthcare sector. HCP's real estate portfolio includes hospitals and medical office buildings, along with senior living facilities. 

HCP has long been a powerful dividend machine and now sports a 6.6 % yield. While REITs have had the wind at their back for several years, due to their ability to lock in record low interest rates on existing debt and realize strong pricing on their assets, HCP saw its share price plummet in 2015, along with other REITs. The plunge was due to fears interest rate hikes could curb profits in the near future. 

Investors who buy REITS for their high dividends during periods of low bond yields often sell them as bond yields start to rise. In addition, higher interest rates raise the cost of capital for REITs, which affects their bottom line. However, HCP has seen rate hikes before and has proven to be extremely durable. The company has increased its dividend for 30 consecutive years, making it the only REIT in the S&P 500 Dividend Aristocrats index. 

For long-term investors, the timing is particularly good to take a closer look at HCP, since the company recently took action to address what has been its biggest problem. In its Q1 earnings report in May, management affirmed they will be spinning off HCR ManorCare into a separate real estate investment trust. That's fantastic news, since ManorCare has been a big drag on HCP's performance, due to declining admissions and lower rent coverage. 

Post spin-off, HCP will own a private-pay portfolio of more than 860 properties generating income of about $1.4 billion a year. Add to that the powerful demographic tailwind of aging baby boomers and HCP stock has a great shot at long-term outperformance.

All in all, if you're looking for sources of solid income to get you through retirement, HCP is a terrific candidate.

Ensign Group (NASDAQ: ENSG)
If you live in the Sun Belt, you might be familiar with Ensign Group. Currently, its portfolio includes 204 healthcare facilities, ranging from skilled nursing, home healthcare, hospice care, assisted living and urgent care companies--many in Sun Belt states.

Acquisitions have been the key catalyst for Ensign's growth, and there's no reason to believe it intends to stop the buying spree. Acquisitions in various states increased revenues by 30.6% in 2015 over the previous year. 

The company has a strong track record of improving occupancy rates, revenue, and quality metrics for facilities it acquires. Same facility revenue growth improved 7% last year, compared to 2014, and 83% of the lower quality facilities it acquired successfully moved upward in quality rating. 

Net income also increased to $66.1 million in full year 2015, up by 31.6%  from 2014. Management recently projected continued increases--particularly in the latter half of 2016, as more acquisitions come on line. 

Expanding its customer base and market share has been a winning strategy for this company, and the outlook for the stock is bright. 

Almost Family (NASDAQ: AFAM)
Kentucky-based Almost Family was founded nearly 40 years ago. The company is the fourth-largest home healthcare provider in the United States with over 250 branch locations in 14 states.

Like Ensign, Almost Family is in the sweet spot of rapid expansion, and it's picking up speed. In the past twelve months, the company has reported nearly $150 million in major acquisitions that should enlarge its footprint across the nation.

Almost Family prides itself on being highly innovative in what is often considered a boring industry. The company uses telehealth monitoring with its homebound patients and is deeply involved with one of the most innovative aspects of the federal health overhaul--accountable care organizations (ACOs). The ACO program is changing payment models in healthcare, with providers taking responsibility for groups of patients and Medicare and insurers offering financial rewards for saving money and hitting quality goals for those patients. Almost Family has nearly 122,000 "accountable care" patients under contract through 15 organizations.

The company has been hitting on all cylinders financially. It reported record net service revenues of approximately $145 million last quarter, up almost 19% compared to the same quarter last year. Much of the increase is due to a full quarter of WillCare revenue coming on line. The $53 million buyout of WillCare was the second-largest acquisition in Almost Family's history and fears the integration would be bumpy have proven unwarranted.

Investors should note that like many thinly traded stocks, Almost Family and Ensign Group occasionally goes through share price upheavals for which there seems no rational explanation. Watching for these drops can open a buying opportunity for those who believe these companies' excellent prospects will propel their continuing rise over the long term.

There's little reason to think investors are too late to the party for the health home-care stocks. But with recent volatility, there's no need to be in a hurry.

Senior living is a lean, mean, profit machine. Don't ignore it.
As more Americans head into retirement, the demand for these facilities will only increase. Based on data from the U.S. Census Bureau, slightly more than 5% of those aged 65 and up live in senior living facilities. This figure jumps to nearly 50% for those aged 95 and up. As life expectancies grow and baby boomers begin to retire in in full force, the demand for senior living solutions is only going to increase.

While senior living stocks don't get a lot of press, given the bullish fundamentals and growth opportunities, investing in this sector could deliver substantial returns for many years.

Cheryl Swanson has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.