These 'Best Stocks' are both growth and defensive, with a customer base growing each day, says Josh Brown

Welltower (WELL) and Ventas (VTR), prominent REITs in senior living and medical real estate, are significantly outperforming the broader real estate sector, driven by strong demographic tailwinds from an aging population and constrained senior housing supply. Welltower, an $80 billion enterprise, reported a 20.7% year-over-year increase in Q3 Funds From Operations and 20.3% same-store net operating income growth, alongside a low 2.36 net debt to EBITDA. Ventas, valued at $50 billion, saw its senior housing segment grow 16% and plans $2.5 billion in equity-funded housing investments, while actively deleveraging. Both companies are pursuing aggressive growth strategies, prioritizing revenue expansion and future distribution increases over high current dividend yields, positioning them as high-growth, defensive investments capitalizing on a predictable demographic shift.

Analysis

Welltower (WELL) and Ventas (VTR), prominent REITs in senior living and medical real estate, are significantly outperforming the broader real estate sector, with WELL up 48% YTD and VTR up 30% YTD. This strong performance is driven by a strategic focus on private-pay senior housing, capitalizing on robust demographic tailwinds from an aging population. Both companies exhibit aggressive growth strategies and strong balance sheets, distinguishing them from traditional, yield-focused REITs.

Welltower demonstrated exceptional operational strength, reporting a 20.7% year-over-year increase in Q3 Funds From Operations (FFO) and 20.3% same-store net operating income (NOI) growth. The company executed $23.2 billion in transaction activity year-to-date, including $14 billion in acquisitions, while maintaining a record-low net debt to EBITDA of 2.36. This growth translated into a 10.4% dividend increase from the prior quarter, despite its current 1.61% yield being the lowest in its sector.

Ventas also showcased strong growth, with its senior housing segment growing 16% year-over-year, contributing significantly to its net operating income. VTR plans $2.5 billion in equity-funded housing investments for 2025, targeting mid-teen internal rates of return, indicating a commitment to high-growth, capital-efficient expansion. The company further strengthened its financial position by significantly deleveraging in Q3 2025, reducing its net debt to EBITDA from 6.3x to 5.3x.

Both REITs are uniquely positioned to benefit from the rapidly expanding "over 80" population, projected to grow 28% over the next five years, coupled with record-low senior housing supply. This structural demand-supply imbalance provides a compelling growth runway, enabling both companies to expand margins through fuller occupancies and fuel higher future payout growth. The investment thesis centers on these defensive businesses leveraging predictable demographic shifts for sustained revenue growth and increased distributions.

Key Decisions for Investors

• Investors should consider WELL and VTR for long-term growth exposure within the defensive real estate sector, driven by compelling demographic tailwinds and strong operational execution.
• Given the recent strong performance and technically extended conditions, a patient approach may be prudent, looking for potential pullbacks to optimal entry points, such as WELL in the mid-170s or VTR in the low-70s.
• Focus on the companies' revenue growth, FFO/NOI expansion, and future distribution potential rather than current dividend yields, as both prioritize reinvestment for long-term value creation.
• Monitor ongoing deleveraging efforts and equity-funded investment strategies as key indicators of continued financial health and sustainable growth in this capital-intensive industry.