Companies involved in the healthcare sector are seen to be resilient. Their services are needed even during economic recessions. Therefore, it is not surprising to see healthcare stocks trading at premium price-to-earnings (PE) ratios as compared to the stock market in general.
Even though the stocks may look expensive based on PE ratios, some of the healthcare service providers listed here have decent dividend yields, as shown in a recent report by the Singapore Exchange.
With that, let’s look at three healthcare companies with the highest dividend yields, as of 25 July 2018.
1. Singapore O&G Ltd (SGX: 1D8)
Singapore O&G takes the top spot with a dividend yield of 4.2%. The company has a team of 12 specialist medical practitioners providing services such as obstetrics and gynaecology, and dermatology.
For the first quarter ended 31 March 2018, Singapore O&G’s revenue improved by 17.3% year-on-year to S$8.2 million. The increase was broad-based, with all three business segments of obstetrics & gynaecology, cancer-related and dermatology performing well. Singapore O&G’s new paediatrics segment also contributed to the top line. The healthcare provider’s net profit grew as well, from S$2 million a year ago to S$2.5 million in the latest quarter.
At the share price of S$0.355 on 25 July, the company was trading at a PE ratio of 19.4.
2. ISEC Healthcare Ltd (SGX: 40T)
With a dividend yield of 4.1%, ISEC Healthcare takes the second spot. The firm, which provides specialist medical ophthalmology services, was also featured as one of Singapore’s best five dividend stocks.
The first-quarter revenue for ISEC Healthcare increased 14% year-on-year to S$9.6 million while net profit grew 29% to S$2.1 million. The top line increase was primarily due to higher patient visits from the group’s specialised eye care services in Singapore and Malaysia. Growth in the bottom line was mainly due to higher gross profit, which was partially offset by an increase in administrative expenses.
Looking ahead, ISEC Healthcare mentioned:
“The Group will continue to pursue suitable opportunities to enter China, Indonesia, Myanmar and Vietnam through strategic alliances, joint ventures or acquisitions. At the same time, we are also keen to strengthen our existing presence in our core markets of Singapore and Malaysia.
For our plans to pan out, the Group will continue to grow our talent pool and stay at the forefront of the ophthalmology services industry by driving innovation and adopting cutting-edge procedures and technology to offer our patients the best possible treatments.”
Shares in ISEC Healthcare ended Wednesday at S$0.295 apiece, giving a PE ratio of 18.3.
3. TalkMed Group Ltd (SGX: 5G3)
Provider of medical oncology and palliative care services in Singapore, TalkMed, slots into the third spot. Its shares, at a price of S$0.64 on 25 July, had a dividend yield of 3.3% and a PE ratio of 29.2.
Unlike Singapore O&G and ISEC Healthcare, TalkMed’s first-quarter revenue and net profit fell. Revenue for the latest quarter came in at S$12.1 million, down 25.7% year-on-year. The decline was largely due to a “decrease in the number of patient visits compared to the same corresponding period last year”. Net profit of S$5.4 million was a 37.2% decrease as compared to the 2017 first-quarter.
As for its outlook, TalkMed commented:
“The Group is facing pressure on revenue from the competition arising from lower medical costs in our neighbouring countries. With Dr Ang Peng Tiam’s resumption of his medical duties on 25 March 2018, we look forward to an improvement in the Group’s revenue and earnings in the coming months.”
Dr Ang, who is TalkMed’s executive director and chief executive officer, was suspended for eight months due to a complaint filed by two daughters of a patient.
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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. The Motley Fool Singapore has recommended shares of Singapore Exchange. Motley Fool Singapore contributor Sudhan P owns shares in Singapore Exchange.