Getting a dividend each quarter is nice. But getting a higher
payout every quarter is even better. That's whatHealthcare
Services Group (
) has offered investors.
The Bensalem, Pa.-based provider of housekeeping, laundry and
food services to long-term care facilities has boosted its payout
36 times since it started paying regular quarterly dividends in
the second quarter of 2003. Seven of the hikes have come since
Healthcare Services tends to announce its payout increases in
conjunction with its quarterly earnings announcements.
The company most recently raised its dividend in July to 16.38
cents a share from 16.25 cents. Although the increase was small,
Healthcare Services has more than doubled its payout since
On an annualized basis, Healthcare Services pays investors 66
cents a share. This works out to a yield of about 3%, which tops
the roughly 2.5% yield in the S&P 500.
Healthcare Services offers the largest yield in IBD's
Commercial Services-Healthcare group. But only two companies in
the 13-member group pay dividends. The other, National Research (
), has a 2.1% yield. But the stock is thinly traded.
In the past, Healthcare Services has attributed the dividend
increases to its strong financial position and performance.
The company delivered double-digit profit growth in every
recent year except 2008.
Healthcare Services has a three-year earnings growth rate of
11%. Its three-year Earnings Stability Factor is 3, signaling a
rock-steady stream of profits.
In the past four quarters, the company's earnings growth
ranged from 8% to 14%, which is below the 25% threshold for
growth stocks. But the firm's sales growth has accelerated for
four straight quarters, with the most recent quarter's increase
Analysts polled by Thomson Reuters see profit rising 18% to 66
cents a share this year, up from a 10% rise in 2011. Earnings are
slated to increase 21% to 80 cents a share in 2013. That would
mark a doubling of earnings from 2008.
Healthcare Services has no debt and about $56 million in cash
and cash equivalents.