2 healthcare shares with dividend yields over 6.5%

The IVF providers have high yields and could be great long-term investments.

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The two largest IVF providers in Australia are Monash IVF Group Ltd (ASX: MVF) and Virtus Health Ltd (ASX: VRT).

IVF is a very important procedure for the patient and families involved. Here are a few reasons why IVF providers could be a good long-term investment:

Families are having children at an older age

There are many more couples who are both working than in previous generations.

Families are making a conscious decision to delay having children and work hard in their careers or business to get as far ahead as possible.

The older we become the harder it is to create a child and the more likely it is that families will require assisted reproduction techniques.

Monash IVF and Virtus are perfectly placed to benefit the most with their multitude of businesses to assist patients.

New treatments unlock more possible IVF cycles

IVF technology has come a long way in the few decades that it has been operational.

Every advance that is developed creates more potential patients and customers.

There is now a range of techniques that can be used. Unexplainable infertility conditions today perhaps might be treatable in a few years, but this will cost the most of course, as brand-new treatments often do.

Big dividend payers

Most healthcare businesses don't have very big dividend yields, stocks like CSL Limited (ASX: CSL) and ResMed Inc. (CHESS) (ASX: RMD) have yields under 2%.

However, Monash IVF has a grossed-up dividend yield of 6.67% and Virtus has a grossed-up dividend yield of 7.09%.

They have such high yields because they trade on quite low earnings multiples and they have high dividend payout ratios. Monash IVF is trading at 14x FY17's estimated earnings with a payout ratio of 67%. Virtus is trading at 14x FY17's estimated earnings with a payout ratio of 71%.

Foolish takeaway

I think both companies are worth being on my watchlist. I like Monash IVF because it seems to be performing better in Australia whilst Virtus has a much bigger overseas segment to its business.

For some growth stocks that could be even better than Monash IVF and Virtus, you should check this out.

Motley Fool contributor Tristan Harrison has no position in any stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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