Hitting a New High - (PHP)
Hitting a New High
Much to my delight, though slightly to my surprise, Primary Health Properties (PHP) has had a brilliant couple of weeks, rising from 140p (close to a high) to close today at 150.6p to 150.8p, a terrific new high.
Barclays Capital has initiated coverage of the stock, joining a solid group of supporters, starting with an overweight verdict and a target price of 160p. Among the trades today, someone bought 675,000 at 151p. Great.
It seems that, whatever the Election outcome, there is general agreement that yet more money will continue to be pumped into the National Health Service. PHP provides healthcare premises to doctors and the like, steadily expanding and improving the portfolio, supported by whatever government and – crucially – with the rents covered by the government. So it really is onward and upwards.
Company boss Harry Hyman is careful to bring his investors along with him, publishing broker reports on the company website and commissioning paid-for reports from sensible source like Edison and Hardman. The wealth of information is overwhelming and very reassuring.
The latest version comes at https://www.phpgroup.co.uk/investors/results-centre. Do look at it. Page five is my favourite, explaining all of the good things coming after the merger with MedicX. Page six shows the remarkable record of 23 years of rising dividends, now comfortably covered 104%.
The only modest caution must be about the pace of share price growth. It has already seemed that the new highs the shares have been hitting through this year meant there was little room to go still higher – yet they have. Now, at 150p, they yield 3.8% on the likely 2019 dividends and 3.9% after taking in the probable rise from 5.6p to 5.8p in the total payments for 2020. There is some chance that the 2020 payout could be a touch higher than general expectations, but whatever way you play it, the value is getting pretty full right now.
That said, PHP is one solid share to have and hold through market worries. The business model seems rock-solid, and the dividends – at least 90% covered by the state – look secure. Time and again the shares have been recommended here for way more than a decade as the prudent, play-safe part of any portfolio. There have been periods when they have dipped (not really dropped) for a spell, but the steady growth almost guarantees that they will pick up again. They offer a good alternative for part of the cash element of a portfolio, given that the income is so much better than that from a bank or building society account, and that the shares are a liquid market with a narrow buy/sell spread.
I have a holding in Primary Health Properties.