American Healthcare REIT is on track to be a winner in 2026, Jefferies said. The Wall Street firm cites senior housing stocks as the biggest contributor to real estate’s aging population, and the firm expects them to outperform this theme next year. The real estate investment trust, which went public in early 2024 at $12 per share, also pays a solid 2.10% dividend. “AHR stands out as a top pick in 2026 given its peer-leading exposure to RIDEA (REIT Investment Diversification and Empowerment Act) senior housing, second-lowest cost of capital, and growing investment pipeline,” Jefferies analyst Jonathan Petersen wrote in a note earlier this week. “AHR’s market capitalization is approximately $9 billion, so we expect the acquisition to be more profitable than its larger peers. We expect external growth to help beat expectations,” he added. Petersen has a $57 price target on American Healthcare REIT, suggesting an upside of about 20% from Thursday’s closing price. The stock is up nearly 68% since the beginning of the year. AHR YTD Mountain American Healthcare REIT YTD YTD If the Federal Reserve lowers interest rates, Peterson noted, REITs will find a better operating environment next year. Also, as money market and bond yields fall, dividends become more attractive to investors and companies are able to raise or refinance at lower costs of capital. But with significant rate cuts not a certainty, Petersen recommends sticking to a sustainable earnings growth theme that doesn’t require Fed support. This includes responding to the aging population. Population Growth According to the Census Bureau, people 65 and older made up about 17% of the U.S. population in 2020. By 2030, they are expected to account for 21% of the population, and that proportion will continue to rise until 2060. Next year, the first wave of baby boomers born in 1946 will turn 80. Senior housing in particular should benefit from the accelerating growth in the over-80 population, Petersen said. This group is projected to grow at a compound annual growth rate of 5% until 2030, significantly outpacing the 1.4% CAGR from 2010 to 2024, he noted. Meanwhile, construction as a percentage of inventory was just 2.3%, the lowest level since the third quarter of 2011, Petersen said. He predicts that national occupancy could exceed 100% by the end of 2028, “creating meaningful pricing power for incumbents.” Welltower and Ventas should also benefit from this trend, Petersen said. He rates both stocks as “buys.” His $231 price target for Welltower suggests a 23% upside from Thursday’s closing price, while his $93 price target for Ventas suggests the stock could rise 16% over the next year, not including dividend income.
