Monday, February 27, 2012

Investing in the Healthcare Industry - Options for Healthy Returns

Investors looking for opportunities to get in on the huge healthcare market in the United States have several options. Investing in the healthcare industry can be in the form of health insurance companies, hospitals, medical supply companies, pharmaceutical companies, REIT - healthcare facilities, and more. Finding the right investment vehicle for your needs is a matter of deciding what level of risk you can handle, the amount you want to invest, and what type of return you are looking for. Probably the best average return on investment in this industry comes from the REIT - healthcare facilities sector.

REIT stands for real estate investment trust. REIT companies are companies that combine investing in the healthcare industry, real estate investing, and stock market investing. A REIT company is a company whose whole business is to invest in real estate. They are companies typically specialized in a specific type of property, like residences, retail, hotels, healthcare facilities, and more. The structure of a REIT is specially formed for tax benefits. At least seventy-five percent of the assets and income has to be in the real estate investments. The corporate profits that would be taxable can be tax free if they are distributed back to the shareholders in the form of dividends. To follow the rules for a REIT, at least ninety percent of the profits must be given out this way.

The healthcare facilities REIT company industry averaged 24.6% profit margins in 2008. This means that there was a nice hefty profit made by the investors in this field. Investing in the healthcare industry in the area of pharmaceuticals can also be very profitable because pharmaceutical companies have huge profit margins. However, so many issues, like clinical trial results, rumor, public opinion, and current events, effect the rise and fall of stock prices that investors should monitor investments in this sector fairly closely.

Health insurance companies also offer opportunities for investing in the healthcare industry. This sector is considered to be a stable investment because people need health insurance even in tough economic times. The constancy of the need and structuring of the insurance company can offset the dips in membership due to unemployment levels rising. Many health insurance companies also offer different branches of services like life insurance, dental insurance, accident insurance, and vision insurance, the performance of these companies can also affect the overall value of the company and its stocks.

No comments:

Post a Comment