The InvoCare Limited (ASX: IVC) share price has grown by 129% over the last 10 years and the dividend has grown every year since 2005.
Not many businesses on the ASX have produced this type of consistency. I think Invocare is a great business and is worth a place in any portfolio. Here are three reasons why I think Invocare's profits and share price will keep growing:
Morbidly consistent industry
The sad reality is that a certain number of Australians pass away every year. This provides funeral operators with a certain amount of consistent business each year.
Invocare has a dominant market share in Australia with around 33% of funerals. If Invocare can maintain its market share through organic growth and small acquisitions, then it will have a very defensive profile.
Various sales channels
Invocare has many different business brands to appeal to consumers at different price points. It has national brands Simplicity Funerals and Value Funerals for the price conscious customer, whilst White Lady Funerals is available for families with bigger budgets. It also has several smaller brands that are more local to certain states.
By having multiple brands it gives consumers a sense of choice and allows Invocare to potentially attract any customer looking for funeral services.
Long-term growth
The long-term death rate of Australia is predicted by the Australia Bureau of Statistics to steadily grow each year until 2034 at which time it is expected to grow by 2.8%.
This long-term tailwind should provide Invocare with reliable increases to its revenue and profit over the next 15 years. There are few companies on the ASX that you could take such a long term buy and hold approach with.
Foolish takeaway
I think Invocare is one of the most solid businesses on the ASX and is worth a place in any portfolio. It's currently trading at 24.6x FY17's estimated earnings with a trailing grossed up dividend yield of 4.26%.
