Dividend-paying small-cap healthcare stocks are a rare breed, but certainly exist nonetheless. The following companies all possess market caps less than $2 billion, pay quarterly dividends, and provide services in the healthcare, biotech, or medical device industries. Like with any investment, investors should always determine their investment strategy, risk tolerance, and desired portfolio yield, when evaluating these names.
Atrion Corp (ATRI) is a supplier of a wide range of medical devices. It is best known for its and fluid delivery and cardiovascular products, and supplies products primarily to niche markets. Atrion’s diverse portfolio of products ranges from soft contact lens cases to open heart surgery devices.
Share Price: $195.96
Market Cap: $395.84 million
Dividend: $0.56/quarter (1.14% annually)
Atrion pays a solid dividend and has raised its payout every year since 2003. However, what’s potentially more attractive to investors is its history of paying one-time special dividends. It distributed $10 per share in late 2012 and paid two one-time dividends in 2010. With a near-flawless balance sheet and steady cash flow, there’s no reason to believe this trend won’t continue.
After a pullback, Atrion now trades at 16x earnings and $70 below its all-time high. It also has excellent growth prospects if it can deliver another successful product.
Chemed Corporation (CHE) operates under two different home healthcare segments: Vitas Healthcare and Roto-Rooter. Vitas Healthcare provides hospice care to patients with life-limiting illness. Meanwhile, Roto Rooter is regarded as one of the most trusted names in plumbing.
Share Price: $77.98
Market Cap: $1.44 billion
Dividend: $0.18/quarter (0.92% annually)
Demand for hospice care and plumbing is timeless, which is why Chemed is regarded as a defensive stock. The company has tripled its dividend since 2009 and now yields just short of 1%. Chemed could also reap the benefits of the recent housing recovery, with more households in need of plumbing. This strength in housing is already starting to reflect in the stock price, as Chemed is up 23% over the last year.
The Ensign Group, Inc. (ENSG) operates over 100 long-term care facilities in the United States.
Share Price: $34.65
Market Cap: $753.85 million
Dividend: $0.06/quarter (0.69% annually)
Ensign has been fairly aggressive in its acquisitions, purchasing a number of healthcare, rehabilitation, and skilled nursing centers in 2013. While healthcare is typically a defensive industry, Ensign has been able to spur growth via smart acquisitions and strong management. Its stock is up 31% in the last year and historically raises its dividend every couple years.
PDL Biopharma Inc. (PDLI) is a biotech company that manages antibody humanization patents and royalty assets. PDL receives licensing royalties from a number of antibody developers.
Share Price: $7.65
Market Cap: $1.07 billion
Dividend: $0.15/quarter (7.84% annually)
PDL is unique because it is a biotech stock with an extremely high yield. Because it receives royalties on a number of patents, PDL has strong operating cash flow and relatively low expenses. It can therefore afford to return some of these royalties to shareholders. However, PDL has an immense amount of long-term debt. For this reason, it trades at only 5x earnings, which makes PDL either underpriced or risky as a long-term investment.
Meridian Bioscience Inc. (VIVO) develops, manufactures, sells and distributes diagnostic test kits for a number of parasitic infectious diseases.
Share Price: $21.84
Market Cap: $904.53 million
Dividend: $0.19/quarter (3.48% annually)
Meridian has paid a steady dividend since 1990 and tends to raise its payout every few years. With almost no debt, a good yield, consistent top and bottom line growth, and a strong grip of the diagnostic test market, Meridian’s business appears to be strong.
By Joseph Goldman