The healthcare industry has evolved in recent years. There have been countless innovations from various sectors, spanning from digital healthcare to pharmaceutical companies. Exposure to the healthcare industry could be a viable option for investors looking to benefit from technological advancements and the growing demand for more healthcare providers.
Read on as we’ll share the best healthcare stocks, the risks and challenges and shed light on whether it could be a valuable addition to your investment portfolio.
Top 10 healthcare stocks in Canada (with key metrics)
Here is a list of the top publicly traded Canadian healthcare companies based on the market cap, dividend yield and recent performance trends. This list comprises different industries in the healthcare sector.
Note: The market cap and dividend yields fluctuate from time to time. Be sure to find the most recent data when making important investment decisions.
Healthcare stock charts
Why invest in Canadian healthcare stocks?
There are several advantages when it comes to investing in Canadian healthcare companies. First of all, the healthcare industry offers stable growth, as it offers essential services and can withstand economic uncertainty.
Another advantage is technological advancements, such as wearable technology, health apps and artificial intelligence, that are helping create new investment opportunities. We also see demographic shifts, such as the aging population, driving demand for long-term care and retirement facilities. So, healthcare stocks may be a suitable choice for those with a more defensive investment strategy.
Top healthcare sectors and key players
These are the major sectors of the healthcare industry when it comes to investing in this space. While there are a vast number of healthcare companies within each category, here are a few noteworthy ones.
- Knight Therapeutics Inc. (KSI): This pharmaceutical company focuses on innovative treatments for Canada and Latin America.
- Cipher Pharmaceuticals (CPH): A specialty pharmaceutical company with a diversified portfolio of commercial products. They also develop and bring to market products in Canada, the US and South America.
- Profound Medical Corp (PRN): A commercial-stage medical device company focusing on developing incision-free therapeutic systems using MRI and ultrasound technologies.
- Bausch & Lomb (BLCO): A global company with operations in Canada that supplies vision care, 🩺 and surgical equipment. They’re a subsidiary of Bausch Health.
- Chartwell Retirement Residences (CSH.UN): The largest provider in owning and operating retirement homes across Canada.
- Medical Facilities Corporation (DR): A Canadian-based company that specializes in high-quality surgical facilities in the United States.
- Extendicare Inc. (EXE): A leading provider of housing and long-term care for seniors.
- WELL Health Technologies (WELL): A Canadian tech and digital healthcare company and the largest operator of outpatient health clinics. They also provide EMR services to physicians and clinics.
- Healwell AI (AIDX): Specializes in artificial intelligence and data science for preventative care.
- Vitalhub (VHI): A healthcare software company providing solutions for electronic health records, case management, and workforce automation.
- Andlauer Healthcare Group (AND): This company is a leader in supply chain management, logistics and transportation services within Canada and the United States.
- Cardinal Health Canada (CAH): A subsidiary of the American company, Cardinal Health Inc. They provide medical and surgical products to hospitals in Canada.
Risks and challenges of investing in healthcare stocks
Although good healthcare stocks may be a good area for investors to put their hard-earned money, there are certain drawbacks.
First of all, there are regulatory risks, as Health Canada may change drug approvals or healthcare policies.
When it comes to clinical trials, not all drugs will pass this phase, which adds more costs for developing new drugs. There are also cases of medical malpractice or negligence, which has led to several lawsuits.
Macroeconomic factors, such as government policies and interest rates, could also affect the stock performance of the healthcare sector industries. For example, if interest rates rise, the cost of borrowing money goes up, and it could make it more expensive for companies in the healthcare industry to maintain profit margins.
Remember that, although healthcare tech stocks have enormous potential to disrupt the healthcare space and may provide higher returns (especially with artificial intelligence), they’re typically more volatile than traditional healthcare providers.
Are healthcare stocks right for your portfolio?
Some conservative investors may lean towards defensive stocks, which demonstrate stable performance no matter how the economy is doing.
When comparing the best healthcare stocks to other defensive investments (such as Procter & Gamble or Unilever), healthcare stocks are usually resilient during recessions.
As such, healthcare investments may make sense for long-term-focused investors as it can be rewarding for those who are patient and willing to see gradual growth over time. Additionally, dividend seekers could take advantage of healthcare REITs that provide stable fixed income.
Related read: Best REITs in Canada
To diversify your risk, consider adding complementary sectors to your portfolio. This may include utilities, apartment REITs and consumer staples.
How to buy healthcare stocks in Canada
If you’re ready to add healthcare stocks to your portfolio, here’s a step-by-step guide:
Step 1: Start by opening an account with a brokerage firm, such as Questrade, Wealthsimple or TD Direct Investing. Many big banks have a brokerage platform available.
Step 2: You’ll need to research the risks and rewards of the various medical stocks. Also, it’s important to understand all the associated fees for each stock or ETF.
Step 3: Whether you’re buying an individual stock or a healthcare ETF, you’ll need to find the ticker symbol. Putting all your eggs into one stock comes with greater risk than investing in an ETF that will hold many stocks in one fund and provide diversification. So, if you’re hand-picking several stocks and making regular trades, these fees can add up quickly.
Step 4: Monitor the performance of your holdings and make adjustments if necessary. However, be careful when tinkering your portfolio, as the fees can eat into your capital gains.
The future of healthcare investing
Several trends will shape the healthcare industry. First, AI-driven medicine discoveries and biotech breakthroughs will create new investment opportunities for those eager to participate in medical advancements. Also, with the aging population, the demand for senior care and pharmaceuticals will boost growth for healthcare companies in Canada.
Lastly, keep an eye on virtual healthcare companies as telehealth services continue expanding and benefiting digital healthcare providers. If you want to add healthcare stocks to your investment portfolio, explore various brokerage platforms and open an investment account. Start to research the best medical stocks to understand the associated risks and rewards.
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Sandy Yong is the author of the award-winning book, The Money Master: Inside Secrets On How To Make Your Money Grow and Stay Safe. She has been featured in the Toronto Star, NBC News and Yahoo! Finance.
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