The Best Funeral Home Stocks to Buy in November 2024

They say death and taxes are the only sure things in life. So, if you’re thinking of investing in one of these guaranteed areas, you’re in the right spot. Let’s dive into some of North America’s **best-performing** funeral home stocks.

With the Toronto Stock Exchange being heavily cyclical and exposed to industries such as steel, financials, oil and gas, and gold, there are not many Canadian stocks in the funeral sector.

In fact, Canada’s only publicly-listed company in this industry was taken private, so there are no longer any pure-play funeral home stocks listed in Canada. With that in mind, we must expand this list to North America.

What are the top funeral home stocks to buy right now?

• Matthews International Corporation (NASDAQ:MATW)
• Service Corporation International (NYSE:SCI)
• Carriage Services Inc (NYSE:CSV)

Matthews International Corporation (NASDAQ:MATW)

Let’s start with Matthews International Corp (NASDAQ:MATW), which provides brand solutions, industrial technologies, and, most notably for this piece, memorialization products for the funeral industry.

Some of the merchandise offered includes bronze and granite memorials, benches, crypt plates and letters, burial caskets, crematories, and cremation urns. Nearly 50% of the company’s sales are in the memorialization space.

Although it is a worldwide player, 65% of sales are in the Americas. 

If we focus on the memorialization part of the business, Matthews is well positioned. It has a leading market share in both bronze and granite memorials, as well as cremation equipment. It’s the second-largest provider of caskets, too.

It maintains this advantage through relationships with funeral home operators, its broad product selection, and its long history of being a market leader. Why deal with new suppliers when you can get everything you need from one place?

Matthews also gives investors exposure to growth in the cremation rate in a much more effective way than investing in a funeral home operator. Cremation costs are much lower than traditional burials, which translates into lower cremation profits.

However, Matthews International deals in both, so the company is poised to profit regardless of the industry’s direction. That’s an excellent place to be.

Service Corporation International (NYSE:SCI)

Service Corporation (NYSE:SCI) owns and operates funeral homes and cemeteries in the United States, Puerto Rico, and Canada. The company has more than 1,900 locations in these three areas, including 44 states, eight Canadian provinces, the District of Columbia, and Puerto Rico.

The company has a long history of acquisitions as it attempts to consolidate an incredibly fragmented funeral services industry. Service Corporation controls approximately 15% of the funeral home market, but 75% of funeral companies are owned by independent operators.

Its most significant acquisition to date was Stewart Enterprises in 2013. However, Service has also been making smaller deals since then.

After a nice bump in revenues and earnings thanks to the COVID death rate, Service projects growth to be steady over the next few years, telling investors to expect 8-12% annual increases in earnings.

Key growth drivers include organic growth, pushing through price increases, acquisitions, other capital projects, and share repurchases, helping to increase earnings per share. Service has consistently repurchased shares for years, decreasing outstanding shares by 56% since 2004.

Shares have been a terrific place to park capital over the last decade. Including reinvested dividends, it has a 10-year compound annual growth rate of 15.76%, enough to turn a $10,000 original investment into something worth $43,150.

There are no guarantees that the stock will return a similar amount in the next 10 years, but that kind of track record is usually a good sign.

Carriage Services Inc (NYSE:CSV)

Carriage Services (NYSE:CSV) is another provider of funeral and cemetery services in the United States. It operates 165 funeral homes in 26 states and 31 cemeteries in 11 states. Approximately 70% of revenue comes from funeral home operations, with 30% of business from cemeteries.

Like Service Corporation, Carriage Services is a growth-by-acquisitions play. It’s also looking to consolidate existing family-owned funeral homes.

However, Carriage is much smaller than Service, generating approximately one-tenth the revenue of its larger competitor. That means Carriage can more easily make acquisitions that will move the needle. Even a handful of new funeral homes will impact results. An acquisition of that size would result in a rounding error for Service.

This small size also means fewer investors are paying attention, which could be suitable for someone trying to buy the stock today.

Shares trade at a significant discount on virtually every metric compared to their peers at the time of writing, including price-to-earnings, price-to-free cash flow, and price-to-EBITDA. Value investors take note.

Finally, Carriage has an exciting strategy with its preneed division, where customers prepay for funeral services. That capital is then invested, much like a float in the insurance business. 

Results over the past decade have been mixed. While it was performing exceptionally well, the market hasn’t been kind to smaller-cap stocks over the past few years.

It went from double-digit returns over a 10-year period during our last update to a compound annual growth rate of 6.5% over the most recent decade. That said, once small caps do get more attention, so too will CSV.

Why be bullish on funeral stocks?

Since it’s impossible to invest in taxes, putting cash to work in an industry that makes many people uncomfortable — death, isn’t a bad thing. Yes, everybody dies, but that alone doesn’t necessarily make passing a good investment theme.

You only die once, after all. And longer life spans combined with ever-lower infant mortality translate into lower death rates.

However, a few factors combine to make the funeral home industry bullish. A pandemic caused the untimely death of more than 1 million Americans and an additional 50,000 Canadians.

That alone is a lot of burials. Drug use has led to an explosion of premature deaths in young people. And after a decades-long streak of life expectancy marching ever higher, the trend has begun to reverse in Canada and the United States.

Another reason to be bullish about burial service stocks is that we only die once. Nobody wants to be accused of cheating out on Grandma’s funeral. This ensures a funeral home’s pricing power and means grieving relatives are likely to say yes to high-margin add-ons.

As our population grows, so does the need for resting places. Yes, many folks opt to be cremated, but they still want somewhere relatives can visit. So they’re choosing a hybrid option and storing cremated remains in vaults at the cemetery. This, combined with still strong demand for casket burials, also bodes well for the cemetery business.

Besides, what better way to hedge your own inevitable passing? A small investment in a top funeral home stock could make you enough money to pay for a pretty comfortable trip into the afterlife. It’s an excellent way to stick it to the man.