2 healthcare shares I like for income and growth 

The healthcare industry is currently growing at a healthy rate. With our growing and aging population, healthcare looks set to become a larger part of the Australian economy over time. 

There are plenty of businesses who are already riding this wave. 

With growing earnings comes growing dividends, keeping both growth and income focused investors happy. 

Here are two companies with strong histories and bright futures. 

Sonic Healthcare Limited (ASX: SHL)

Sonic Healthcare is a medical diagnostics company which operates all over the world.  

The company helps patients by providing pathology, radiology and clinical services in 8 countries. Sonic has been a true Aussie success story. Since starting in 1987, it’s become one of the biggest pathology companies in the world. 

Shareholders have been well rewarded over the last decade, with a total shareholder return of 9.7% per annum. 

Sonic has also provided solid income, with dividends growing at a rate of 5.3% per annum over the last 10 years. 

The company currently trades on a multiple of 22x earnings, and a dividend yield of 3.2% partly franked. 

Ramsay Health Care Limited (ASX: RHC)

Ramsay Health Care Limited is a global hospital operator, spanning 6 countries. 

The company operates 221 hospitals, 14 day surgery centres, as well as treatment facilities, rehabilitation and psychiatric units. 

Ramsay has been a story of growth, with earnings and dividends increasing at a rate of 16% and 17% respectively, over the last decade. 

The total shareholder return over the last 10 years has been 21.8% per annum. 

Shares are trading on a multiple of 26x earnings, and a dividend yield of 2.3% fully franked. 

The company is guiding for 8%-10% earnings growth this year. 

Foolish takeaway  

Both of these companies are quality healthcare stocks, but they’re not worth an unlimited amount. 

If I was going to buy one of these today, it would be Ramsay Health Care. It’s not cheap, but I think the higher multiple is deserved because of the higher expected growth rate. 

For income investors, the healthcare sector is one to watch for strongly growing dividends.

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Motley Fool contributor David Gow owns shares in Ramsay Health Care Ltd. The Motley Fool Australia has recommended Ramsay Health Care 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 Scott Phillips.

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