Benjamin Franklin made famous a quote that says” The only things certain in life: death and taxes.” One of the sad facts of life is death. A certain number of Australians die every year and the families want to provide them with a special funeral. The amount that families spend for funeral arrangements can be sizeable and a big chunk of the earnings goes to InvoCare Limited.
InvoCare is the largest funeral and cemetery operator in Australia. Its guaranteed earnings are almost a third of the market. The company shares have performed rather well for the last five years, growing by 89%. Since the death rate in Australia is predicted to increase every year until 2034, it provides an ample opportunity for InvoCare to grow its business.
With the ageing demographics of Australia, InvoCare is in a situation where its growth can move higher. In the company’s annual report to December 30, 2016, the revenue of the business grew by 3.3% and its operating earnings per share by 11.8%. If the death rate increases, the earnings will certainly move at faster rate.
InvoCare has achieved consistent growth of profit which is proven by the dividend increase every year since 2006. At present, the funeral and cemetery operator is currently trading with grossed-up dividend yield of 4.12%. In the latest report, it has increased half-year dividend by 11.8%.
InvoCare can claim to be the most defensive business on the Australian Securities Exchanged (ASX) because it is currently trading at 28x FY17‘s estimated earnings. This is certainly not cheap but it is expected considering the tailwind it enjoys. If you do not find it too morbid, InvoCare stocks are ideal for long term investment because its shares were up by 155% within the last five years. Shares are cheap right now and yet it has a bigger dividend.
If you are looking for someone who can assist you in funeral arrangements, your best option is funeral director in Perth that will help you ensure a fitting funeral service for your loved one. Year of experience in the industry allow you the best advice on the most affordable options.