The NIB Holdings Ltd (ASX: NHF) share price has had a rather successful year so far in 2023. Since the start of the year, NIB shares have risen a pleasing 9.07%, going from $7.61 each to Monday's market close price of $8.30.
That compares favourably against the S&P/ASX 200 Index (ASX: XJO), which is up around 5.19% over the same period:
NIB shares are also up 13.85% over the past 12 months.
But this ASX 200 insurance provider could still be worth a buy today, despite the gains the company has already booked over the past seven months or so. Here are three reasons why.
Image source: Getty Images
3 reasons that NIB shares could still be a buy today
NIB shares: A major player in a government-supported industry
Most Australians would be at least somewhat familiar with private health insurance and its role in our healthcare system. NIB is a major provider of private health insurance services in Australia, with around a 9.4% market share.
Private health insurance is one of the few products that the government pushes customers into. If you earn above a certain income threshold, you could get penalised with extra tax bills if you don't hold an eligible policy.
Few companies can say that the government actively heard customers their way. But NIB can, making it a compelling reason to consider this company in my view.
A company with strong fundamentals
The best ASX shares tend to display an ability to grow revenue, earnings and profits at a compounding rate over time. NIB has shown it has what it takes to deliver in this arena. Its most recent half-yearly earnings report, covering the six months to 31 December 2022, revealed a 9.3% increase in revenues to $1.5 billion.
Earnings per share (EPS) was up by an even rosier 12.4% to 20 cents, while NIB's net profit after tax (NPAT) metric rose 12.8% to $91.6 million. This all enabled NIB to jack up its interim dividend by 18.2% to 13 cents per share, fully franked.
Dividend potential
Speaking of dividends, NIB is one of ASX's best companies if you want dividend income from the healthcare sector. For one, the company currently sports a robust trailing dividend yield of 2.9%, which comes fully franked.
That's a fairly decent dividend yield on the ASX today, especially from a healthcare stock. But NIB shares have also shown an ability to increase their dividends over time. We've already noted that this year's interim dividend was a pleasing 18.2% hike over what investors received last year.
It's also important to consider that the 24 cents per share that shareholders bagged in 2021, as well as the 22 cents per share that were paid out in 2022, were massive increases over the 13 cents per share investors got in 2019, and the 14 cents per share doled out in 2020. And back in 2012, shareholders received just 4.3 cents per share.
So the dividends from NIB are certainly going in the right direction.
