We've just witnessed the fall of an ASX dividend aristocrat

Ramsay Health Care Limited (ASX: RHC) is now out of the running to be an ASX dividend aristocrat, at least until 2046. Here's why.

| More on:

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Over in the US, the term 'dividend aristocrat' is one that every investor knows.

It refers to a dividend-paying share that has increased said dividend non-stop for at least 25 years in a row.

Here in Australia, the term is less well known. Why? Because (as hard as it is to believe here in the land of franking credits) we simply don't have any.

And dividend kings – the stocks with a 50-year history of dividend raises? Nothing more than a regal legend on the ASX boards.

However, we do have some ASX shares that are getting close to true 'dividend aristocrat' status.

Take Washington H. Soul Pattinson and Co Ltd (ASX: SOL). Soul Patts has just increased its dividend for the 20th year in a row. 5 more and it will be crowned the ASX's first dividend aristocrat.

Unfortunately, this week, we lost another contender.

Ramsay Health Care Limited (ASX: RHC) had a dividend history to rival that of Soul Patts – delivering a dividend increase annually since 2000.

Until Monday.

a woman

ASX dividend aristocrat no more

Tragically, Ramsay will be starting from zero in 2021 after it announced its dividends will be suspended for the remainder of 2020.

The company has already paid an interim dividend in March. But if it doesn't pay a final dividend in 2020 (like it's told us it won't) the 20-year streak will come to an end.

Now, Ramsay must have broken its streak because it absolutely had to. We can gather from the ASX release (in which a capital raising was also announced) that its current cash flows have been so severely impacted by the coronavirus that there simply isn't the money there to fund dividend payments for ordinary shares.

But still, this is a sad week for Ramsay Health Care and its shareholders. The list of potential ASX dividend aristocrats grows thin indeed. After Ramsay, I'm watching Brickworks Limited (ASX: BKW) in this space. It's not far behind Soul Patts for dividend longevity. But who knows, maybe in 2046 Ramsay Health Care might finally wear that coveted crown.

Foolish takeaway

Even though I'm bitterly disappointed about this news from Ramsay, I'm still bullish on the long-term future of this company. It has a large network of impeccably-run private hospitals, both in Australia and across several other countries.

Healthcare is an 'evergreen' industry that will only benefit from the ageing population demographics across advanced economies well into the future.

Motley Fool contributor Sebastian Bowen owns shares of Ramsay Health Care Limited and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of and has recommended Brickworks and Washington H. Soul Pattinson and Company Limited. 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.

More on Healthcare Shares

Surgeon looking at a monitor in an operating room.
Healthcare Shares

The bull and bear case for CSL shares

What are the realistic prospects for this once powerful healthcare company?

Read more »

Medical workers examine an x-ray or scan in a hospital laboratory.
Healthcare Shares

Why this red-hot ASX healthcare share keeps climbing

A 1,600% gain hasn't slowed this stock down.

Read more »

A woman smiles at the outlook she sees through binoculars.
Healthcare Shares

How much could the CSL share price rise in the next year?

Can this business deliver very healthy gains from here?

Read more »

Group of scientists cheering in the lab after the company received good news.
Healthcare Shares

Why is this ASX biotech stock blasting higher today?

Investors are backing the biotech's growing commercial and pipeline potential.

Read more »

Modern accountant woman in a light business suit in modern green office with documents and laptop.
Healthcare Shares

Down 30%, should I buy ResMed shares now?

A sharp fall can make investors cautious, but it can also create opportunity when the long-term business remains strong.

Read more »

A group of people in a corporate setting do a collective high five.
Healthcare Shares

3 beaten-down ASX healthcare shares tipped to rise up to 202%

Analysts have a strong buy rating on two of these healthcare stocks, and all three are tipped to have an…

Read more »

A group of people push and shove through the doors of a store, trying to beat the crowd.
Share Market News

Investors are buying CSL shares again. Should you?

Some experts believe that 2026 could mark the low point for the biotech company.

Read more »

A group of young people celebrate and party outside.
Healthcare Shares

If I'd invested $5,000 in 4DMedical shares 12 months ago, guess how much I'd have now!

Can the company's share price keep accelerating even higher? Here's what analysts tip for the next 12 months.

Read more »