Recent Purchase - Medical Facilities Corp (DR)


I recently initiated a position in Medical Facilities Corp. It trades on the TSE under the symbol DR. This will be a long term holding for me and has a 1% weighting in my portfolio.

About DR

"Medical Facilities owns controlling interests in five specialty surgical hospitals located in Arkansas, Indiana, Oklahoma and South Dakota, and an ambulatory surgery center located in California. The specialty surgical hospitals perform scheduled surgical, imaging and diagnostic procedures. The ambulatory surgery center specializes in outpatient surgical procedures, with patient stays of less than 24 hours. Medical Facilities also owns controlling interest in a diversified healthcare service company located in Oklahoma that provides third-party business solutions to healthcare entities such as physician practices, facilities, and insurance companies"

Reasons I Bought:

-8.6% dividend yield
-75% payout ratio
-PE 16X
-ROE 24.15%
-ROA 15.43
-Current Ratio 2.3X
-Debt to Capital 33%

Other than the above fundamental reasons I like how the company has structured the ownership of their hospitals. The corporation (DR) owns 55% of the hospitals and the surgeons that work there own the other 45%. I can't think of a better way to motivate staff than making them part owners of the company. This alligns the goals of the surgeons with those of the company.

There is also a demographic tailwind because as we all know the average age in the United States rises each year and it's no secret that the older we get the more medical procedures we need.

I'm not expecting much in the way of capital appreciation but with a 8.6% yield even 2% share growth per year would be fine with me.

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