Providing Customers With Dignity Will Differentiate These Companies
Reuben is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
"My late father used to say that no quality of human life was more important than dignity," Yale law professor Stephen Carter recently commented on Bloomberg.com. He takes that concept someplace I wouldn't have, but he is on to an issue that will be increasingly important as the Baby Boomers retire. Focusing today on companies helping people maintain their dignity as they age will lead you to good investment ideas.
Not Quite Right
Mr. Carter suggested that we re-frame many of our most contentious issues around the concept of dignity, which went too far for my taste. But the notion of dignity stuck in the back of my mind. Its importance finally came to me in a conversation with my father when he noted that, as a 70-year-old retired man, he felt marginalized—like his needs were less important than the needs of younger people.
That's a hard pill to swallow for a man who worked and saved his whole life so he could enjoy a time when he no longer had to work. It was also a hard thing for me to listen to, because my father is no second class citizen to me.
More on the Way
My father was born at the tail end of the so-called Greatest Generation. He has, quite literally, done everything in his life a few years before the Baby Boomers. That has actually been a huge benefit to my father in many ways, since he was able to take advantage, unknowingly, of many of the trends the boomers would explode. So, you could say, that my dad is a trend setter.
That my father feels this way now, when the leading edge of the Boomers are just entering their retirements means that, in a few years, there are going to be a lot more people who feel the same way. To make matters worse, many Boomers haven't saved nearly enough, so they will find themselves continuing to work, but likely at a much different level than before.
Investors should be focusing right now on companies that help this society's elders retain their dignity. For example, healthcare is going to be important, but how that care is provided will help differentiate the winners from the also rans. Here are some companies moving in the right direction:
Cardinal Health (NYSE: CAH)
Cardinal Health provides pharmaceuticals and medical products to more than 60,000 pharmacies, hospitals, ambulatory surgery centers, and physician offices. As a middle man, the company isn't all that interesting.
However, it is buying privately held AssuraMed, a supplier of products for home use to treat diabetes, wounds, and incontinence, among other things. Helping people stay in their homes will not only help save on medical bills, but it will also allow people to maintain a level of dignity that is virtually impossible to have in a hospital.
Omega Healthcare Investors (NYSE: OHI)
Omega Healthcare Investors is a real estate investment trust that owns or holds mortgages on over 450 skilled nursing facilities and assisted living facilities across 33 states. When a person needs more care than can be provided in their own home, they will have no choice but to move into a medical facility of some sort. Omega focuses on owning these facilities.
However, people's needs are along a continuum. For those who need less assistance, Omega owns assisted living facilities. For those who need a total care solution, it owns skilled nursing facilities. Health Care REIT and HCP are two larger and more diversified options to consider, though they are notably more expensive at present.
Darden Restaurants (NYSE: DRI)
Darden Restaurants is a leader in the casual dining segment. Its concepts include such ubiquitous brands as Olive Garden and Red Lobster, among others. Its prices are reasonable, which is important to a group of people who still like to eat out, but don't want to, or can't, pay huge sums to do so (early bird special jokes aside).
However, if you have ever been in an Olive Garden you might not have noticed some very important things. For example, the chairs are on wheels, which makes sitting and getting up from the table easier. And there are generally ramps and ample room for people to move around the restaurant, including those who might be in wheel chairs or other similar devices, electronic and otherwise. The company purposely makes Olive Garden easily accessible.
You can't put a price on dignity, but you can see its impact very clearly. The idea of dignity is already a big issue in healthcare, but, because of the size of the Baby Boom generation, it will be an issue that we all think about soon enough. Thinking about it now will help lead you to companies well positioned for tomorrow.
Reuben Brewer has positions in Health Care REIT and HCP. The Motley Fool recommends Health Care REIT. The Motley Fool owns shares of Darden Restaurants. 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. Is this post wrong? Click here. Think you can do better? Join us and write your own!