Edit ModuleShow Tags

Who's afraid of health care?


We’ve just experienced the 18th U.S. government shutdown. The stock market reacted by whipsawing up and down hundreds of points. Yet the S&P 500 just had another record close. So it looks like the health care-induced shutdown wasn’t all bad for investors.

What about past shutdowns? Did they help or hurt the markets?


Since the first government closure in 1976, according to SentimenTrader.com, the previous 17 shutdowns produced a positive leap in the market 65 percent of the time, after only one month.


This latest economic game of chicken was fought over the Affordable Care Act, also known as Obamacare. It’s a very emotional fight with very large economic consequences.

The Henry J. Kaiser Foundation states that Medicare spending will top $1 trillion per year in 2022. We will end up paying huge sums of money for an aging populations’ health care. That’s where we end up with the political debate. Do we pay now or pay later? Who pays ultimately? The government of the consumer?

Those are questions better left to the politicians.


The health care sector is a significant industry. The Commerce Department reports that, in 2010, health care services generated $1.75 trillion in revenue. It employed 14 million people, accounting for 9 percent of the U.S. workforce.

One of the largest ETFs in the sector is SPDR Health care Fund (symbol: XLV). This is a fund of 56 different holdings, yielding 1.66 percent per year. It’s spread across pharmaceuticals, insurers and device makers.

Another well-known ETF is Vanguard Health Care Index Fund (VHT). It has 294 holdings, pays 1.29 percent annually and has very low expenses of 0.14 percent.


Health care Realty (HR) is a real estate investment trust with a 4.95 percent current yield. They own 204 properties worth $3 billion.

LTC Properties (LTC) pays 4.77 percent income from 179 different properties. LTC is a unique “play” on three areas: real estate, an aging population and health care.


Another exposure to this sector is insurance providers. The three biggest, publicly-traded are United Health Group (UNH), WellPoint Inc (WLP) and Aetna Inc (AET).  All three have dividend yields below 2 percent but have very low P/E ratios, meaning they are relatively cheaper than the market and earning solid profits.

Keep in mind all of these ideas are educational only. They should be considered starting points on your further research. Also, any sector investments, like health care, should be less than 10 percent of a balanced and diversified portfolio. When possible, you should invest in mutual funds instead of individual stocks to spread your risk.

If you’d like information on investing for income, including the health care sector, request my free report “Creating Your Own Dynamic Income Portfolio.” Use the contact info below.

Edit Module
Ron Phillips

Ron Phillips is an Independent Financial Advisor and a Pueblo, Colorado native. He and his wife are currently raising their two sons in Pueblo. Order a free copy of his book "Investing To Win" by visiting www.RetireIQ.info or leaving a message on his prerecorded voicemail at 924-5070. Simply mention Promo Code #1001 when ordering.

Get more of our current issue | Subscribe to the magazine | Get our Free e-newsletter

Edit ModuleShow Tags

Archive »Related Articles

First to market and no fear of failure

Tanner McGraw started Apto in 2012 to provide a cloud-based CRM and deal management platform for commercial real estate brokers. Five years later, Apto holds enterprise agreements with five of commercial real estate’s top seven brands, and has 85 full-time employees — up from 27 in 2015.

Should you compromise company policies?

What do you do when a widely accepted policy that affects both culture and bottom line is challenged by a highly valued, highly productive and hard-to-replace employee?

The 12 brand archetypes – Which is yours?

What we often fail to realize is connections are just relationships. If you aren’t clear about who you are, no one is going to be interested in you. It’s critical you understand your brand, and how you should start a relationship with your customers.
Edit ModuleShow Tags
Edit ModuleEdit ModuleShow Tags
Edit ModuleShow Tags Edit ModuleShow Tags
Edit ModuleShow Tags Edit ModuleShow Tags
Edit ModuleShow Tags Edit ModuleShow Tags