CSL Limited (ASX: CSL) is one of Australia's greatest global success stories.
Rising from a pharmaceutical minnow worth just $300 million in 1994, CSL is now a $42 billion global blood plasma heavyweight with offices dotted across the globe.
However, despite achieving an average annual compound return (capital gains plus dividends) of over 25% since 1994, the future may be just as promising for CSL investors. Here are three reasons to consider owning CSL shares today.
- CSL, along with fellow ASX-listed healthcare success stories such as ResMed Inc. (CHESS) (ASX: RMD) and Cochlear Limited (ASX: COH), has successfully grown its business globally. Currently, just 10% of sales revenue is generated in Australia, with 39% of sales revenue coming from its largest market in the United States. China is another huge but somewhat untapped market which CSL is currently targeting.
- Long-term growth. One characteristic that makes CSL a winning investment is its product differentiation. Billions of dollars of research and development spread over many years has culminated in products that customers know and trust. Intellectual property rights protect the company and further product releases provide exceptional long-term growth prospects. For example, The Australian Financial Review recently noted that following a decade of research, the upcoming launch of haemophilia A and haemophilia B drugs will boost sales by "hundreds of millions of dollars".
- Defensive profits. Thanks to its diverse but unique product portfolio, thousands of people throughout the world rely on CSL's products to treat serious medical conditions. This affords CSL a stable and recurring revenue stream since patients are very unlikely to forgo medical treatment in even the direst financial conditions. Strong and recurring free cash flows have enabled CSL to pay a sustainable dividend. Currently, its dividend yield is forecast to be 2%.
Foolish takeaway
CSL is one of Australia's largest companies thanks to years of successive growth in local and international markets. Although the heady days of 25% per annum returns may be behind it, I believe investors could do a lot worse than consider owning CSL shares as part of a well diversified share portfolio.
