The Ensign Group, Inc.'s ENSG board of directors recently approved a 4.2% hike in its quarterly cash dividend to boost shareholders' value. The increased dividend is 6.25 cents per share compared with the previous payout of 6 cents. It will be paid out on or before Jan. 31, 2025, to shareholders of record as of Dec. 31, 2024.

This marks the 22nd consecutive year of dividend increases for ENSG. Based on the Dec. 13 closing stock price of $142.42, the new dividend yield is 0.17%, slightly above the industry average of 0.15%. Ensign Group also has a $20-million share buyback program, which was authorized this May. However, it has not made any repurchases under this program, which will run for around a year from Sept. 1, 2024.

Acquisitions of healthcare facilities remain the top priority for management when allocating capital. In October 2024, ENSG acquired St. Joseph Rehabilitation and Care Center, an 83-bed skilled nursing facility and Skyview Villa Assisted Living, a 20-bed assisted living facility.  In the first nine months of 2024, ENSG paid dividends of $10.2 million to its stockholders. With regular dividend payments, staying away from share repurchases temporarily may not be a concern for investors.

Robust cash flows prompt Ensign Group to pursue uninterrupted dividend hikes. It generated operating cash flows of $134 million in the third quarter of 2024, which climbed 8.9% from the year-ago quarter. An expanding cash balance also bears testament to ENSG’s financial strength. In addition to this, a revolving credit facility also serves to finance its buyouts.

Shares of Ensign Group have risen 26.9% in the year-to-date period compared with the industry’s 17.9% growth. ENSG currently carries a Zacks Rank #2 (Buy).

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Other Stocks to Consider

Some other top-ranked in the broader Medical sector are Pediatrix Medical Group, Inc. MD, CareDx, Inc. CDNA and Encompass Health Corporation EHC. Each stock presently carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for Pediatrix Medical’s current-year earnings indicates 7.1% year-over-year growth. MD beat earnings estimates in three of the trailing four quarters and met once, with an average surprise of 9.9%. The consensus mark for its current-year revenues is pegged at $2 billion.

The Zacks Consensus Estimate for CareDx’s current-year earnings indicates a 167.2% year-over-year improvement. CDNA beat earnings estimates in each of the trailing four quarters, with an average surprise of 135.2%. The consensus mark for revenues implies 17.5% growth from the year-ago period.

The Zacks Consensus Estimate for Encompass Health’s 2024 earnings implies a 17.6% increase from the year-ago reported figure. EHC beat earnings estimates in each of the trailing four quarters, with an average surprise of 13.6%. The consensus mark for its current-year revenues is pegged at $5.34 billion, which indicates an 11.2% year-over-year increase.

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Pediatrix Medical Group, Inc. (MD) : Free Stock Analysis Report

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