It’s no secret that Canada’s population is aging. What may come as a surprise is how quickly the transformation is occurring.
In 2023, almost 19 per cent of Canadians were 65 or older, and that number is expected to rise to more than 21 per cent by 2030.
In the superage category, the number of people 85 and older is expected to triple by 2046.
In the meantime, the percentage of the population of working age is gradually declining.
All of this has major implications for the Canadian economy, many of which have not been addressed in a meaningful way. They include:
Old Age Security: As more people qualify for OAS, it puts a greater strain on maintaining payments at current levels. This is because there is no dedicated Old Age Security fund (unlike Canada Pension Plan), so the program is financed from general revenues. A combination of low birth rates, longer life expectancy and a dwindling work force to support an aging population spells big trouble down the road. Several countries that have attempted to cut costs by raising the retirement age have encountered strong public resistance.
Health care: Older people need more medical attention than younger ones. That means more doctors and nurses, higher per capita costs for dental care and pharmaceuticals, more diagnostic tests, more home care services – all of which will put an increasingly heavy strain on government budgets.
Specialized accommodation: Many people would prefer to age in place but can’t do so for a variety of reasons. They include mobility problems, loss of mental capacity, debilitating physical issues and lack of finances. What do we do with these folks?
Right now, the answer is to construct a patchwork quilt of public and private institutions designed to accommodate elderly people in varying stages of aging. Some of these homes offer only baseline accommodation and support. The horror stories that emerged during the pandemic about the indifferent and in some cases abusive treatment some people were receiving shocked the country.
Other retirement and long-term care residences can be compared to five-star hotels. They offer gourmet meals, luxurious suites, nightly entertainment, bars, pool tables, swimming pools, beauty salons, 24-hour on call nurses and planned excursions. I think of them as stationary cruise ships.
One publicly traded company that is worth your attention is Extendicare Inc. EXE-T, which has been posting strong results and has seen its stock more than double in value over the past year. Here are the details. Prices are as of the close on Jan. 30.
Extendicare Inc.
Type: Common stock
Current price: $23.46
Entry level: Current price
Annual payout: $0.504
Yield: 2.1 per cent
Risk Rating: Moderate risk
Website: www.extendicare.com
The business: Extendicare is based in Markham, Ont. It provides care and services for seniors across Canada under a variety of names, including ParaMed, Extendicare Assist, SGP Purchasing Network and its own corporate name. The company operates 99 long-term care homes, of which it owns 59. The rest are managed under contract. The company has a staff of about 28,000.
The security: We recommend the common shares of the company, which trade on the TSX.
Performance: The stock took a hit when the company (along with others) was named in class-action lawsuits arising from the pandemic. These lawsuits allege inadequate protection and preparedness that contributed to the spread of infections and death. The cases are still pending. The stock was virtually flat from 2021 to early 2025, when it began to move sharply higher on the strength of improving financials. It is now trading near its record high.
Why we like it: Extendicare is one of the leaders in its field and maintained its dividend through the pandemic despite experiencing a stressful environment and negative publicity.
Recent financials: Third-quarter results were strong. Revenue was up $81.2-million year-over-year, to $440.3-million, driven primarily by the acquisition of nine new homes. Adjusted EBITDA increased $14.7-million, to $50.8-million, while net operating income was $65.9-million, up $15.8-million. Net earnings were up 48 per cent, to $24.1-million, while adjusted funds from operations (AFFO) were $29.5-million ($0.349 per basic share).
The first nine months of the fiscal year saw revenue increase $123.7-million to just under $1.2-billion. Adjusted EBITDA was $126.2-million, up $21.3-million from 2024. Net earnings were $71.1-million, up 28.6 per cent. AFFO was $74.1-million ($0.877 per share).
Chief executive Dr. Michael Guerriere said the third quarter marked “our strongest performance in recent years, reflecting margin improvement across all segments.”
Acquisition: Extendicare is seeking to grow by acquisition. “The aging demographic is driving demand in a fragmented seniors care market, providing an opportunity for further accretive acquisitions,” Dr. Guerriere said.
Last year, the company completed the acquisition of Closing the Gap (CTG) for $75.1-million. CTG brings a team of 1,200 caregivers with experience in nursing, health and pediatric services.
Distribution policy: Extendicare pays a monthly dividend of $0.042 a share ($0.504 a year) to yield 2.1 per cent at the current price. The last dividend increase was in March, 2025.
Risks: The stock has had a strong run and could be vulnerable to profit taking, although the p/e ratio is reasonable at 21.88.
Tax implications: The monthly payments are eligible for the dividend tax credit if the shares are held in a non-registered account.
Who it’s for: The stock is suitable for investors who are willing to accept a modest yield plus capital-gains potential in a sector that will continue to grow as the population ages.
How to buy: The stock trades on the TSX with an average daily volume of 262,000. You should have no trouble getting a fill.
Gordon Pape is editor and publisher of the Internet Wealth Builder and Income Investor newsletters.