This 5%-yielding ASX 200 dividend giant looks like a hidden gem to me

Sonic Healthcare Ltd (ASX: SHL) is an S&P/ASX 200 Index (ASX: XJO) dividend giant, which looks like a hidden gem in my opinion.

How big is the Sonic Healthcare business? It has a market capitalisation of almost $15 billion, according to the ASX. It’s one of the larger businesses on the ASX, though it’s not quite as large as a company like Woolworths Group Ltd (ASX: WOW) and Telstra Group Ltd (ASX: TLS).

What does Sonic Healthcare do?

It’s best-known as being a global pathology business. In other words, it’s an ASX healthcare share that helps healthcare professionals test patients and figure out what’s wrong.

Sonic Healthcare has sizeable operations in a number of countries including the US, Australia, Germany, the UK, Switzerland, Belgium and New Zealand.

The business also has a large radiology division which made $796 million of revenue in FY23. In total, this ASX 200 dividend giant made total revenue of $8.17 billion last financial year.

Why it’s a dividend leader

The business has been paying a dividend for a number of decades and it increased the dividend most years. Indeed, the company’s leadership has a progressive dividend policy. In other words, the board of directors want to grow the dividend for shareholders, if possible.

There are very few businesses on the ASX that have grown their dividend as frequently as Sonic Healthcare over the last two decades.

The ASX 200 dividend giant is not guaranteed to grow its dividend every year, but I think being in the healthcare sector means the business is defensive enough to perform for income-focused shareholders every year.

It’s growing profit with organic growth – it’s benefiting from the ageing population tailwind as well as growing populations. Sonic Healthcare also has been steadily making acquisitions, increasing its scale in Australia, the US and Europe.

Sonic Healthcare is also investing in AI, which could help the company’s operations and margins in the future.

Dividend yield

In FY23, the business paid a dividend per share of $1.04. That translates into a trailing grossed-up dividend yield of 4.7%.

According to Commsec, the business could pay a dividend per share of $1.071. If it did pay that, this would translate into a forward grossed-up dividend yield of close to 5%.

While it’s not the biggest yield around, I like the history of reliability and growth that this ASX 200 dividend giant has offered.

The post This 5%-yielding ASX 200 dividend giant looks like a hidden gem to me appeared first on The Motley Fool Australia.

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More reading

• Here’s why brokers are very bullish on these ASX 200 blue-chip shares
• Weathering market storms: Dividend stocks in Australia as a safe harbour
• One ASX dividend giant I’d buy over CBA shares for 2024
• Dividend investing: A proven path for Australian income seekers
• Got a lot of cash? Here’s why I’d start investing it in ASX shares in 2024

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has positions in and has recommended Telstra Group. The Motley Fool Australia has recommended Sonic Healthcare. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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