But what about the children?Childcare centres have proven...

But what about the children?

Childcare centres have proven popular with investors because of their defensive characteristics, but in early 2018 the industry was suffering from oversupply issues in some locations.

This capacity problem seems to be abating, while the federal government’s revised childcare subsidy scheme came into effect in July. Under the revised arrangements, more parents are winners than losers.

Industry leader G8 Education (GEM, $2.90) has been the “go to” stock, but for investors wary about the company’s $1.3 billion market capitalisation there are two smaller alternatives.

Think Child Care (TNK, $1.45) operates 55 centres, mainly in Victoria. The occupancy issues saw Think shares slide some 50 per cent from their January 2017 highs. But in a November update, Think affirmed calendar 2018 earnings expectations of $4.75m-$5.25m (earnings per share of 10-11c).

Mayfield Childcare (MFD, 95c) points to a net profit of $4.4m for calendar 2018 and expects to delight investors with a 9.2c per share dividend, implying a 10 per cent yield. Mayfield shares have lost 30 per cent of their value since peaking in February 2018.