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4 healthcare shares I want to buy for long-term growth

The healthcare sector is one of the best places to be invested in my opinion. Its defensive and growing earnings make a strong combination.

I am very interested in the following four companies for my portfolio:

NIB Holdings Limited (ASX: NHF)

NIB is one of Australia’s largest private health insurers with a market capitalisation of $2.52 billion.

Private health insurers benefit from all the different types of healthcare needs, which makes it a good investment to gain broad exposure to the healthcare industry.

NIB has been performing very well, it has grown its number of policyholders at an impressive rate over the last few years.

It’s currently trading at a reasonable 21x FY17’s estimated earnings with a grossed-up dividend yield of 4.36%.

Sonic Healthcare Limited (ASX: SHL)

Sonic is one of the biggest healthcare businesses in Australia with a market capitalisation of $9.4 billion.

It is a large pathology business with operations in several countries. In the May budget the government announced that Medicare will pay a higher amount for pathology, which should boost Sonic’s Australian business.

Sonic is trading at 20.5x FY17’s estimated earnings with a partially franked dividend yield of 3.36%.

1300 Smiles Limited (ASX: ONT)

1300 Smiles is one of Australia’s largest dental businesses with a market capitalisation of $138 million.

The business has come up with a clever way of providing affordable care, whilst also generating recurring revenue and loyalty. It has a $1 a day dental plan which is proving to be very popular.

1300 Smiles is trading at 22x FY16’s earnings with a grossed-up dividend yield of 4.68%.

Nanosonics Ltd. (ASX: NAN)

Nanosonics is the company behind a disinfectant medical device that uses ultrasound probes. It has a market capitalisation of $881 million which is growing quickly.

There is a huge potential market for Nanosonics’ devices in thousands of medical facilities across Europe and America. Management are making good progress growing sales, particularly as hygiene requirements increase around the world.

Foolish takeaway

The healthcare sector is definitely one of the best places for your capital over the next few years in my opinion. The above four options, as well as Ramsay Health Care Limited (ASX: RHC) and Healthscope Ltd (ASX: HSO), would be good for any investor.

At the current prices, I think NIB Holdings and 1300 Smiles look like the best long-term buys to me because of how much growth the companies can still achieve.

For more great growth businesses you should read this.

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Motley Fool contributor Tristan Harrison owns shares of HEALTHSCPE DEF SET and Ramsay Health Care Limited. The Motley Fool Australia owns shares of Nanosonics Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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