For many people, death is one of the most uncomfortable topics to talk about. And for some people, death is their bread and butter.
There are about 56,860 morticians and funeral attendants in the US alone. If we add cremators, casket makers, mortuary makeup artists, etc., it becomes evident that the death care industry is massive.
And since growing populations inevitably result in a higher number of deaths each year, this morbid industry is, unfortunately, “evergreen.” The best funeral home stocks in Canada and the U.S are a great way to gain exposure to this steady industry.
Funeral Homes – An Asset Class Worth Considering
There are a few things you need to understand before you invest in funeral homes:
- Funeral homes are a segment of a larger death care industry.
- Funeral homes are used for holding funerals, so it doesn’t matter whether the body is to be burned or buried. If there is an official funeral, then a funeral home would be needed.
- Many funeral home companies also hold cemeteries in their portfolio. And since there is a major shift happening where more people prefer cremation than a burial, this asset class might become a liability for such companies. In Canada, the cremation rate reached 73% in 2020. In the US, the rate is 56.1% and climbing.
- The cremation industry is highly “fragmented” in the US and Canada, which means most of the industry is controlled by relatively small, private companies. And there are only four sizeable publicly-listed funeral home companies in Canada and US, and the largest of them has a portfolio that’s twice the size of the rest put together.
Best Funeral Home Stocks In Canada and the U.S
The funeral home industry in North America has very few publicly listed companies. Most businesses that cater to these services and death care, in general, are small and privately owned. And the trend is quite similar almost everywhere else in the world.
1. Park Lawn Stock
- Exchange: TSX
- Ticker: PLC.TO
- Niche: Memorialization, Cemetery and Funeral Services
- Forward Dividend Yield: 1.43%
- Dividend Payout Ratio: 41.49%
- Dividend Yield (12-Month Trailing): 1.46%
- Upcoming Dividend Date: Oct 17, 2022
- Market Cap: $814.70 Million
- Forward P/E Ratio: 14.49
- Average Analyst Rating: 1.9 - Buy
Park Lawn is the largest and only publicly-traded company in the funeral home space in Canada. It has a decent presence in the country and a significantly larger presence in the US.
The company owns both cemeteries (135) and funeral homes (138). The Canadian part of the portfolio (31 properties) is a fraction of the US portfolio, with 242 funeral homes and crematories in 16 states.
If we go by the number of locations and reach, it’s the third-largest funeral home company in North America. Still, this placement puts it much closer to the next-in-line company than the top dog: Service Corp International.
It has been a successful stock so far. The ten-year CAGR of 22% (Between Feb 2012 and Feb 2022) puts it near some of the best growth stocks in the country, and its growth remains eerily stable.
It is also a dividend stock, though the yield pales in comparison to its growth potential. However, the company is at risk due to a massive shift towards cremation that’s taking place in North America (in Canada more than in the US).
That risk hasn’t affected the company’s earnings and stock’s performance yet, but that’s something to keep in mind before you make an investment decision.
If you are adamant about a purely Canadian funeral home company investment, Park is your only choice, but luckily, it is one of the best funeral home stocks in North America.
2. Service Corporation International Stock
- Exchange: NYSE
- Ticker: SCI
- Niche: Funeral, Cemetery, and Cremation Services
- Forward Dividend Yield: 1.55%
- Dividend Payout Ratio: 20.69%
- Dividend Yield (12-Month Trailing): 1.56%
- Upcoming Dividend Date: Sep 30, 2022
- Market Cap: $9.76 Billion
- Forward P/E Ratio: 17.85
- Average Analyst Rating: 1.5 - Strong Buy
Service Corporation International is not just the largest funeral home company in North America but also one of the largest in the world. And ironically, its Canadian presence is significantly larger than Park Lawn.
The company has 158 stand-alone funeral homes, four stand-alone cemeteries, and eight combo properties. In the US, it has almost a thousand funeral homes, 183 cemeteries, and 290 combo properties, bringing the total locations to 1,938.
This is miles ahead of the next largest player in the game: Park Lawn. This reflects in the revenue as well, where the company draws about 15% of the total revenue generated by the death care industry in both US and Canada.
This monopoly also makes Service Corporation one of the best funeral home stocks in North America. It returned over 660% to its investors in the last decade (including dividends).
If it can sustain its pace, you can easily double or even triple your capital in half a decade. And as a clear leader in the highly fragmented industry, it’s as stable and recession-resistant as a stock can realistically be.
3. Carriage Services Stock
- Exchange: NYSE
- Ticker: CSV
- Niche: Funeral homes and Cemeteries
- Forward Dividend Yield: 1.23%
- Dividend Payout Ratio: 13.93%
- Dividend Yield (12-Month Trailing): 1.28%
- Upcoming Dividend Date: Sep 01, 2022
- Market Cap: $493.69 Million
- Forward P/E Ratio: 10.66
- Average Analyst Rating: 1.5 - Strong Buy
The next name in line is Carriage Services, with its 203 locations, all in the US. It also has a much larger concentration of funeral homes in its portfolio and a wider reach with that asset class (171 in 26 states).
Since cemeteries are larger tracts of land and used exclusively for burial, even a smaller number (32 in 12 states) might be considered a healthy enough percentage of the overall portfolio.
The geographic portfolio diversification is population-oriented, with the highest number of locations in Texas and California. The company has been steadily growing its revenue, and it appears to be a financially healthy company.
However, the stock, even though its long-term capital appreciation potential is comparable to Service Corp or Park Lawn, has an uneven growth pattern. Between Feb 2012 and Feb 2022, the stock grew well over 700%.
However, a sizeable chunk of that growth can be attributed to the post-pandemic recovery-fueled rapid growth. So even though it’s counted among the best funeral home stocks, you should evaluate it with more discretion than the other two.
It’s neither the leader in its domain nor has its capital appreciation potential been consistent, so while it can pay off well, it can also become a dead weight.
4. Stonemor Stock
Even though its market capitalization is a far cry compared to even Carriage Services, Stonemor has the second-largest portfolio on this list of funeral home stocks, and unlike most other companies on this list, its portfolio leans more heavily towards cemeteries than funeral homes.
It has 301 cemeteries to its name and 70 funeral homes, and while most of its locations are in the US (24 states), about 11 are in Puerto Rico.
This portfolio distribution would have been an asset if burials were more popular than cremations, but since the ratio already leans heavily towards cremation and the trend is growing, Stonemor’s cemetery-heavy portfolio might be weighing the company down.
This reflects in its stock as well. The company cut its dividends in 2016, and the stock fell almost 60% in a matter of weeks.
It has been mostly downhill for the stock since then (if you disregard the post-pandemic growth spurt).
This stock is on this list because it’s one of the few publicly traded funeral home companies in North America, but it may not be counted among the best funeral home stocks in the country, at least not now. But the winds may shift.
This concludes the list of funeral home stocks in North America. There are a few other companies that are usually placed on similar lists, like the US flower giant that also cover funerals (though their main revenue source is weddings), companies that make caskets (among other things), and even tombstone granite companies.
However, since they are part of the broader scope of the “death care” industry and are not strictly funeral home stocks, I haven’t added them to this list.
International Funeral Stocks to Consider
However, there are three foreign funeral home/death care stocks investors should know about, even if they might not be able to invest in them.
InvoCare (Ticker:IVC) – It’s an Australian company that trades on the ASX. Market-cap-wise, this company would have been on the second spot on this list. Its portfolio is spread out over Australia, New Zealand, and Singapore and includes 300 funeral locations, 17 cemeteries, and 29 crematoria.
Dignity plc (Ticker:DTY) – It’s a UK-based funeral company trading on the LON. It’s the leading funeral service provider in the country, with a portfolio of about 795 funeral locations and 46 crematoria.
San Holdings (Ticker: 9628) – Japan’s largest funeral service company (which trades on the TYO) takes undertakes the responsibility of over 14,000 funerals every year and has a portfolio of 72 facilities.
Is Owning A Funeral Home Stock Profitable?
It depends. Your options are limited to four or so stocks, and out of them, two have been performing consistently well for over a decade.
And since the industry rarely changes and the two companies are still growing via acquisitions, they may stay profitable for decades. So if you hold one or both of those stocks, funeral homes can be a profitable asset class for you.
However, the rise of cremation is causing the number of proper funerals and funeral homes to decline.
And if funeral home companies don’t start adopting this new reality and diversifying their business, the asset class might become dead weight in your portfolio.
Which Company Owns Most Funeral Homes?
Service Corporation International holds the highest number of funeral homes in North America as a whole and separately in the US (997) and Canada (158).
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Publicly traded funeral home companies are quite scarce, which is both a good and a bad thing. It indicates a slow-growing or declining asset class, but higher consolidation also offers more power to the existing giants.
And it’s also easier to identify the best funeral home stocks among the handful there are.
And if funeral homes as an asset class have gotten you thinking about death and old age, you may be interested in a strategic early retirement plan.
If you’re looking for another outside-of-the-box investment, check out the best uranium stocks in Canada.