Ramsay Health Care Limited (ASX: RHC) is one of Australia's largest healthcare businesses with a market capitalisation of $14 billion.
Healthcare is quite a defensive industry anyway, but Ramsay has several reasons to make it particularly attractive.
Here are three reasons why I think Ramsay is one of the best shares to own:
International geographical diversification
Ramsay is Australia's largest private hospital operator. However, it also has operations in the UK, France, Italy, Malaysia and Indonesia.
The international diversification approach is great in my opinion, it mitigates the risk if there is a problem in any particular country. It also gives management the opportunity to expand into more European countries, or other Asian countries such as China.
Ageing population
The demographics of Australia point to an undeniable ageing population. This is going to create a whole host of problems and opportunities for businesses and Australia as a whole.
Ramsay could be one of the biggest beneficiaries of this trend. It is increasing its national bed capacity every year to account for future demand.
A lot of retirees will be accustomed to a certain level of comfort during their working life and will be willing to pay for the better standard of care that staying at a private hospital brings.
Built for growth
Ramsay has a lot of fundamentals going for it but management still have to do a good job to fully capitalise on the opportunity.
Part of this is utilising the profits generated and putting them back into the business. Ramsay keeps a healthy amount of profit, around 50%, after paying a dividend. This provides a great supply of capital for growth without needing to take on excessive debt or issuing new shares.
This approach has allowed Ramsay to grow profit consistently over the last two decades. Ramsay has grown its dividend every year since 2000.
Risks
Funding is a key risk to Ramsay. Private health insurers such as Medibank Private Limited (ASX: MPL) will try to keep a lid on expense growth. The government and patients will also want costs to be kept under control, so Ramsay will have to step carefully.
Foolish takeaway
Ramsay is currently trading at 26.5x FY17's estimated earnings with a grossed-up dividend yield of 2.56%. Although this is fairly expensive, I think it offers long-term investors good value.