With Shares of This Holding Pulling Back, Here’s What We’re Waiting For
We continue to like the intersection of the aging population, senior housing shortage, and dividends this position provides.
You're reading 0 of 1 free page.
Register to read more or Unlock Pro — 50% Off Ends Soon
In our November Monthly Roundup, we called out the impressive performance by shares of Welltower (WELL) , a company that stands to benefit from the intersection of the expanding aging population and what has been identified as a senior housing pain point.
In November, WELL shares were the best performer in the Pro Portfolio and hit a 52-week high on November 28. However, the shares started to leak some of those November gains shortly thereafter, and as we discussed in today’s technical look at WELL, that decline has accelerated over the last week.
We haven’t been shy about saying we would like to add to the Pro Portfolio’s position in WELL. We would welcome the opportunity to build our exposure to a non-tech company poised to benefit from the intersection of the two demographic tailwinds identified above.
Wednesday's comments from Fed Chair Powell about the cumulative rate cuts made by the central bank this year and last year to the tune of 150 basis points, those from Bank of America (BAC) Chairman Brian Moynihan about borrowing costs, and our own about tax law and depreciation changes coming next year, suggest a more hospitable environment for Welltower to grow its footprint. Welltower is not a stranger to that action, having completed $14 billion in acquisitions and $9 billion in dispositions during the September 2025 quarter alone.
Here’s the thing: By 2030, the U.S. population 80 years and older is expected to increase by more than four million people to ~18.8 million. As we’ve discussed, history suggests that at that age, most people can no longer live comfortably or safely at home and seek a senior facility. Per the data service NIC MAP, this means that more than 560,000 new units are needed to meet all the demand by 2030, but only 191,000 are projected to be added.
A Solution?
One solution for companies such as Welltower and its competitors is to acquire existing senior housing communities instead of building them. Because of the financial-related factors outlined above, we could see more activity on this front in 2026. Should this come about, we will want to see Welltower management remain disciplined acquirers, not chase potential transactions just to put some on the board. Given the conversation around risk during the September 2025 earnings call, we would categorize the potential risk on that front as low.
Revenue Driver
When we increased our American Express (AXP) target earlier today, we reminded you about that company's key profit contributor, the net card fee revenue line, and the two key components that drive it – the number of cards in force and average fee per card. On the Welltower income statement, the primary driver of revenue is Resident Fees and Services (~77% of total revenue), which is driven by occupancy rates and corresponding rental/leasing fees, which have rental escalators built in. The shortage of senior housing bodes well for not only occupancy rates but also for richer rental escalators, a combination that, for shareholders, is one that should help drive revenue, cash flow, and profit gains. They should also help fund further dividend increases.
That’s a roundabout way of explaining why we’re interested in growing our exposure to WELL shares. Due to our “disciplined” comment above, several weeks ago, we weren’t inclined to chase the shares, and rather, in keeping with our Two rating, wait for a better risk-to-reward entry.
Our Game Plan for WELL Shares
In the very near term, we will be keeping a watchful eye on WELL shares and their 50-day moving average at $186.25. Today, it appears WELL will close below that level, but we will want to see if the shares close above that 50-day moving average with Friday’s market close. That will signal a positive test of that support level, and should we see that, we’re inclined to add more WELL shares to the Pro Portfolio in the coming days.
If WELL shares do not deliver that positive test, the next level of support clocks in around $176, which could be an even better risk-reward opportunity.
At the time of publication, TheStreet Pro Portfolio was long WELL, AXP and BAC.
