Medical Facilities Corp (TSX:DR) is a unique dividend stock that pays a high yield and that will help you to diversify your holdings. It’s unlikely that your portfolio will hold another stock that has interest in U.S. hospitals and surgery centers.
The nature of the business should provide investors with a great deal of stability, especially as we see the U.S. population continue to age and more seniors in need of medical care. The company’s assets are located across the U.S. with five specialty surgical hospitals and eight ambulatory surgery centers.
In 2016, sales were up 10% and have grown 14% in the past two years. Although the company may not have seen explosive growth, it has maintained a top line of over US$300 million in three of the past four years.
The company also pays a very high yield of more than 8%, which is paid out in monthly installments. While investors may be concerned about the high dividend rate, cash flow has been strong and should eliminate any hesitation. In the trailing twelve months, free cash of US$66 million has eclipsed the US$27 million that was paid out in dividends, and leaves a lot of room for the payout to grow, although it has stayed consistent over the past several years.
The one downside is that over the years the stock has not produced significant returns. Since 2011, the stock is up less than 10% and in the past year it has declined more than 27%. However, it’s been that recent decline that has resulted in the yield skyrocketing to more than 8%.
