Every 217 seconds, an Australian dies. And according to a Financial Review interview with the CEO of Invocare (ASX: IVC), Oz’s largest funeral company, cremation is an increasingly popular option.
In the interview, Chief Executive Andrew Smith noted that there’s currently a clean split between cremations and traditional burials, but that cremation has been making major gains in recent years. The reason? Cold, hard cash.
While a basic cremation costs around $650, a burial costs around $9,000. On the higher end, your loved ones are looking at $3,500 to $5,000 for a classy cremation, while a burial crypt can cost up to $250,000. As Australia (and the world) continues to urbanize at increasing rates, expensive land costs could put an even greater squeeze on burial bills.
Burials are about more than business – but for Invocare, they’re mostly about, well, business. A fair weather winter can improve longevity (a nice way of saying “cut down on elderly influenza deaths”), but long-term investors should look beyond a slow season for the Grim Reaper.
Benjamin Franklin may have helped to found the United States, but his greatest insight most likely came in a 1789 letter when he wrote, “Our new Constitution is now established, and has an appearance that promises permanency; but in this world nothing can be said to be certain, except death and taxes.”
Australian death rates are expected to rise another 15,000 per year from current levels of 145,000, and whether it’s a cremation or burial, Invocare will keep getting calls. For investors willing to wait out the long-term, Invocare may be the most depressingly sustainable profit your portfolio will ever pull.
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The Motley Fool's purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. Motley Fool contributor Justin Loiseau has no position in any stocks mentioned in this article. You can follow him on Twitter @TMFJLo.