MIDAS SHARE TIPS UPDATE: Primary Health Properties – what doctor ordered


MIDAS SHARE TIPS UPDATE: We tipped Primary Health Properties as one that would survive Russia/Ukraine turmoil – that has proved correct

Even if many of us are accustomed to online doctors’ appointments these days, there are still times when we need medical help in the community. 

That’s where Primary Health Properties (PHP) comes in, providing the buildings that house GP surgeries, clinics and other nonhospital healthcare businesses across the UK and Ireland. 

The strategy of the Real Estate Investment Trust (REIT) is to rent the buildings to third parties, and all but ten per cent of its income is government-backed, making it a relatively safe choice for investors. 

Strong choice: Midas tipped Primary Health Properties back in February as one of five that would survive the Russia/Ukraine turmoil

Last week’s half-year figures showed that the business is still on track, despite inflation and volatility in the market. The management believes that inflation may even be a help, not a hindrance since it is able to put the rents up, but has fixed the cost of most of its debt over the long term. 

Midas tipped the stock back in February as one of five that would survive the Russia/Ukraine turmoil. That has proved correct, as although shares are down three per cent since January, they are up from £1.34 when Midas tipped them to £1.48.

MIDAS VERDICT: No investment is risk-free, and PHP must grapple with inflation, the vagaries of the Government when it comes to healthcare funding and market sentiment when it comes to providing capital growth for its shareholders. PHP is also expensive, with stock valuation well above its book value. 

But dividend hunters will benefit from a 4.6 per cent yield from PHP. However, because of its REIT structure it needs to pay out most of its profits as dividends, meaning that when it wants to acquire other companies it must issue new shares, which dilutes existing shareholders. 

Despite all this, PHP is a strong choice, and with a backlog of procedures post-pandemic and an ageing population, investment in healthcare isn’t going away. This investment is worth holding on to. 

Traded on: Main market Ticker: PHP Contact: phpgroup.co.uk or 020 3824 1841 

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