The Ramsay Health Care Limited (ASX: RHC) share price will be under the microscope later today because it's due to release its half year results to 31 December 2016.
Ramsay is the largest operator of private hospitals in Australia and also has operations overseas. Its combined hospital network makes it one of the five-biggest private hospital operators in the world.
Healthscope Ltd (ASX: HSO) reported its results yesterday, the market liked what it saw and sent Healthscope shares up by 5.8%. This could be a good indicator of what could be in store for Ramsay's share price too.
Here are three reasons why you should consider Ramsay shares:
Global operations
Ramsay is one of the few companies on the ASX that has expanded overseas efficiently and successfully.
Its network now includes hospitals in Australia, the United Kingdom, France, Malaysia, Indonesia and Italy. This is an impressive list and provides great diversification to Ramsay's earnings in-case there's a problem in any one country.
However, there are many countries in Europe, Asia and around the world that Ramsay doesn't operate in. China is just one example of a country that is ripe for Ramsay to try to expand into, which would fuel another spurt of growth for several years.
Dividend powerhouse
You may not think of Ramsay as being a great income stock, but I think you should. When you include franking credits the grossed-up dividend yield is 2.37%, which beats the interest rate on most bank accounts by a healthy margin.
Ramsay has increased its dividend for 16 consecutive years going back to 2000, this has provided investors with wonderful income during this time. The dividend per share in 2000 was 7.4 cents and over the last 12 months has been 119 cents, a huge 1,508% increase.
As the Ramsay business gets bigger the dividend increases will steadily slow down, but it could keep increasing the dividend for many years to come thanks to many of the reasons I outlined in this Healthscope article.
Pharmacies
Ramsay has plans to open pharmacies in central city locations near its hospitals, which will create a nice synergy for both businesses to refer patients to each other.
Although this won't generate huge revenue for Ramsay, it could turn into a small boost to revenue if Ramsay can create a network of central city pharmacies supporting the hospitals.
Foolish takeaway
Ramsay is one of the highest quality stocks on the ASX in my opinion and it has strong tailwinds. It's currently trading at 27.5x FY17's estimated earnings with a grossed-up dividend yield of 2.37%. However, if you want a stock that's expanding overseas, including into China, whilst having a large fully franked dividend you should check out this stock.
