Out of all the other options on the stock market the healthcare industry is my favourite industry to invest in.
I like the healthcare industry so much because it offers investors a defensive, yet growing profile.
People value their health above nearly everything else, indeed there are some things that money just can't buy when it comes to health. We'll spend whatever it takes to remain alive and heathy. Someone would need to be down to nothing in the bank not to spend on their health.
Healthcare is a growing industry because of two things. There are always more treatments being developed that are either better or totally new (which cost more). The other reason is that the population is steadily ageing and the elderly age bracket is the one that's most likely to need medical intervention.
I think NIB Holdings Ltd (ASX: NHF) is one of the best options for investors looking to get a piece of the healthcare action. Health insurance is a good way to get diversification to all the healthcare ailments.
NIB Holdings benefits from its diversity of medical coverage unlike specialist health providers such as Monash IVF Group Ltd (ASX: MVF) or Sirtex Medical Limited (ASX: SRX) which could be replaced by another provider if it comes up with a better treatment.
It's one of the largest private health insurers in Australia and is growing every year. In FY17 NIB grew its number of policyholders from 726,710 to 767,672. This was an impressive result considering this was on top of a number of good years.
Other key highlights from the FY17 result was that the underlying operating profit grew by 16.4%, net profit after tax grew by 30.9%, the earnings per share grew by 28.3% and the dividend grew by 28.8%.
NIB has used its relationships with iSelect Ltd (ASX: ISU) and Qantas Airways Limited (ASX: QAN) very effectively to take a lot of the overall growth of the health insurance industry. I'm confident that NIB will keep growing at a good rate whilst it maintains these partnerships.
Foolish takeaway
NIB is currently trading at 25x FY18's estimated earnings with a grossed-up dividend yield of 4%. At this price I think NIB offers a good mix of potential growth and income and should continue to be a market-beater.
