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Read this before buying Ramsay Health Care shares for its dividend

The Ramsay Health Care Limited Fully Paid Ord. Shrs (ASX: RHC) share price fell 1.32% on the ASX today to close at $63.03.

If you’ve been thinking of buying shares in the global hospital group for its growing, fully franked divided, there are a few things you need to know today.

The first is that shares will go ex-dividend on Wednesday, March 6, 2019.  The ‘ex-date’ is when the shares start selling without the value of its next dividend payment so an investor needs to own the shares before the ex-date to receive the dividend. The dividend will then be paid on Friday, March 29, 2019.

What is Ramsay Health Care’s dividend yield?

At its recent half-year results, Ramsay declared a dividend of 60 cents per share for the half year. This was up 4.3% on the same period in 2018 and at the current share price of $63 per share the company offers a trailing dividend yield of 2.3%, fully franked.

Is the dividend sustainable going forward?

This is a great question to ask before buying any company for its dividend.

At the company’s half-year update last week Ramsay presented Net profit after tax (NPAT) of $274 million for the six months to 31 December 2018, up 1.1% on the same period in 2017.

Pleasingly revenue lifted 16% and cash flows from operations lifted 6.5% which is a positive sign for sustaining dividends.

Ramsay has a strong history of earnings and dividend growth and looking forward the group is expecting to achieve its guidance of ‘Core’ earnings per share (EPS) growth of up to 2% for the full financial year.

Foolish takeaway

I think Ramsay Health Care will be a clear beneficiary of the long-term trend of increasing healthcare expenditure and although its current yield of 2.3% is not earth-shattering, the long-term prospects for increasing distributions to investors would be worth short-listing to my dividend watch-list.

However, there are also several other companies going ex-dividend on 06 March to consider, including:

When it comes to picking strong, high yielding businesses to supplement your income though, we think this company should be at the top of your watch-list today.

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Our top dividend stock pick for 2019 currently boasts a 5.4% dividend yield (fully franked). I believe it’s a perfect fit for a well-diversified, income-focused portfolio.

Even better, this yield comes attached to an attractive and still-growing business which could keep expanding throughout Australia and New Zealand for years to come. With disciplined management, and a long track record of building wealth for shareholders, this company is a serious candidate for any income-minded investor’s portfolio.

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Regan Pearson has no position in any of the stocks mentioned.

You can follow him on Twitter @Regan_Invests.

The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Hansen Technologies. The Motley Fool Australia has recommended FlexiGroup Limited and 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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