There are few companies on the ASX that I could truly describe as world class businesses. Ramsay Health Care Limited (ASX: RHC) is one of those businesses.
Ramsay is a private hospital operator and I own some shares of it for the following reasons:
Healthcare earnings are defensive and growing
Healthcare is my favourite industry because its earnings are so defensive.
People don't choose when to get sick or injured. The demand for healthcare, particularly hospitals, is quite consistent each year.
Healthcare is also one of the most important things a person could spend their money on. People will do what it takes to stay alive and healthy.
Ramsay is a good way to get exposure to all the different healthcare issues, not just one area like Cochlear Limited (ASX: COH) or Monash IVF Group Ltd (ASX: MVF).
International operations
The reason why I think Ramsay could be a better investment than Healthscope Ltd (ASX: HSO) is its international operations.
Ramsay currently operates in Australia, France, the UK, Italy, Indonesia and Malaysia. This gives management plenty of opportunities to choose where to grow and also mitigates risk if one country has a short-term economic problem.
Ramsay tried to set up a joint venture to enter the China market, but that didn't eventuate. It may still expand into China or other countries in the future.
Good dividend record
Ramsay may not strike you as a strong dividend stock with a grossed-up yield of only 2.87%, however I think it has impressive credentials.
It has increased its dividend every year since 2000 and only had a payout ratio of 57% in FY17.
Management are expecting core earnings per share growth of 8% to 10% in FY18 and the dividend could grow at a similar level.
Foolish takeaway
Ramsay is currently trading at 23x FY18's estimated earnings, which I think is an attractive price for a business with a long growth runway.
