StoneMor: Unique partnership in cemeteries

With a 9% yield, this company is a timely buy in this 'untimely' market.

By TheStockAdvisors Jun 17, 2013 11:21AM

Headstone (© Jack Hollingsworth/Photodisc Green/Getty Images)By Steve Mauzy, Daily Profit


Thanks to baby boomers hitting their golden years en masse, annual deaths in the United States are expected to rise to 3.2 million in 2030 from 2.6 million in 2010. For income-and-yield investors, there's really only one choice in the cemetery sector -- StoneMor Partners (STON), which yields over 9%.


StoneMor is unique in that it's formed as a partnership. As such, it enjoys a favorable tax structure in exchange for paying out the majority of its profits as distributions to its unitholders.


That distribution amounts to $2.40 annually and is the principal reason StoneMor is a long-standing recommendation of ours.


StoneMor is the second-largest owner and operator of cemeteries in the U.S. As of 2012, it operated 276 cemeteries in 27 states and Puerto Rico. It also owned and operated 86 funeral homes in 18 states and Puerto Rico.


StoneMor has grown by exploiting the demographic trend and by acquiring private cemeteries and funeral homes. Back in 2006, it owned 177 cemeteries and 198 funeral homes.


Revenue back then was $115 million; in 2012, it was $243 million. This year revenue is expected to grow to $253 million, and then grow to $267 million in 2014.


As growth in business operations and revenue has ratcheted up, so too has the distribution. Back in 2006, investors could expect a $0.47 quarterly distribution; today, it's $0.60.


What's more, that distribution has been increased three of the past five quarters. I expect to see additional distribution increases in the near future.


Sure, death is certain. But there's no need for income investors to unnecessarily fret because StoneMor's high-yield distribution is nearly as certain.


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Tags: STON
4Comments
Jun 17, 2013 2:14PM
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That type of yield, people are going to be dieing to get in on it.........
Jun 17, 2013 4:25PM
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They have Funds and maybe ETFs like that now Brutus..

I'm pretty sure there are REITS, dedicated to Retirement areas/homes  and Care facilities also.

I have considered some as investments.

Jun 17, 2013 3:41PM
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Seriously, it wouldn't surprise me to see someone set up a "Golden Years" mutual fund whose whole investment philosophy will be to capitalize on the aging boomers.  With people over the age of 60 making up a bigger and bigger part of our population, there's lots of money to be made investing in successful companies that cater to that age group.  It sounds harsh, but in the next 40 years, medical device makers should do extremely well, along with home health services, casket makers, cemeteries, nursing homes, cruise ships, etc...  We could see REITs start up just investing in retirement related real estate.
Jun 17, 2013 2:38PM
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Yup that was good...yuk,yuk.

I put them on a Watchlist..

And myself too..

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