5 Small-Cap Medical Equipment Stocks That Pay Dividends

Joe Goldman  |

Demand for medical equipment, supplies, and appliances is timeless. Yet, out of all publicly traded medical equipment companies, only a small handful pay dividends. The following companies develop medical equipment, possess market caps of less than $2 billion, and pay regular cash dividends to shareholders.

1. Conmed (CNMD) develops equipment and devices for minimally invasive procedures and monitoring. Its products range from defibrillators to vital sign monitors, and its devices are used in a wide range of operations.

Share Price: $31.21

Market Cap: $885.53M

Dividend: $0.15/quarter (1.92% annually)

Conmed’s business is currently stronger than ever. Its stock reached an all-time high this March at $34.48. It also began paying a quarterly dividend at the beginning of 2012, which indicates Conmed expects free cash flow to continue to grow. After pulling back around 10% since its high, Conmed now trades at a more attractive level of 14.7x forward earnings. With a good yield and steady earnings growth, Conmed appears to be going in the right direction.

2. Invacare Corporation (IVC) manufactures and distributes home medical equipment and supplies. It is best known as a leader in the wheelchair industry (both powered and manual) and also produces patient beds, furnishings, and other personal care products.

Share Price: $13.66

Market Cap: $435.79M

Dividend: $0.01/quarter (0.37% annually)

Invacare stock went into free fall at the end of 2011 and the stock hasn’t recovered since. The company was forced to completely shut down its wheelchair business at two of its facilities until it satisfied federal quality and design regulations. Its stock dropped from $34 to $15 in just a few months.

At the end of 2012, Invacare signed a consent decree to fix its wheelchair manufacturing. Its stock bounced a bit after the news, but the damage was done. Invacare posted a big loss during Q4 2012 and its stock trades even lower than it did while the wheelchair debacle was unfolding. Invacare, therefore, has the potential to recover to 2011 levels if it gets its business back on track. However, serious questions surround its management and earnings inconsistency.

3. Mine Safety Appliances (MSA) develops a wide-ranging variety of supplies that protect people’s health. Among its portfolio of products, MSA develops gas masks, air-purifying respirators, gas detectors, and equipment to protect the eyes, head, face, and ears.

Share Price: $48.96

Market Cap: $1.82B

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Dividend: $0.28/quarter (2.29% annually)

Mine Safety Appliances could be the single most trusted name when it comes to safety equipment. Businesses rely on MSA to operate. Thus, with a strong grasp on its market and regular dividend boosts over the last two decades, MSA appears to be doing better than ever. As a result of its 60.84% payout ratio, MSA boasts a strong 2.3% yield that should get even stronger as earnings continue to grow.

4. Cantel Medical Group (CMN) develops products that control and prevent infection. It produces products such as water purification systems, Crosstext facemasks, and endoscopes.

Price: $32.45/share

Market Cap: $886.79M

Dividend: $0.05/quarter (0.34% annually)

Over the last five years, Cantel’s shareholders have reaped the benefits of excellent management and successful products. Cantel is up almost 600% since recession lows and has repeatedly sett new all-time highs for the last year. Its dividend yield may be insignificant, but Cantel is a well-run company with steady earnings growth and well-regarded products in the healthcare industry. If Cantel continues to operate with such success, a bigger dividend will follow.

5. Atrion Corp (ATRI) is a supplier of a number of medical devices. It is best known for its and fluid delivery and cardiovascular products, and supplies products mainly to niche markets. Atrion’s diverse portfolio of products ranges from its popular soft contact lens cases to open heart surgery devices.

Price: $195/share

Market Cap: $394.04M

Dividend: $0.56/quarter (1.13% annually)

Atrion pays a decent 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 an excellent balance sheet and fantastic growth prospects if it can deliver another successful product.

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