Atrion Corporation: This Dividend Stock Just Keeps Paying Out More
December 17, 2018
ATRI Stock’s Dividend Could Double Again
The market got crushed this month, but one dividend stock has held up better than the rest.
Why? Because people love income. They love safety. And this little-known company offers those two things in spades.
I’m talking about Atrion Corporation (NASDAQ:ATRI). While I doubt you’ve ever heard of the company, this quiet business has become one of the best dividend stocks in the world. I don’t expect this stock to remain a hidden gem for much longer, however.
Atrion makes medical devices for highly specific markets. It supplies crucial items, from cardiovascular and eye care to fluid-delivery products.
The industry represents the ultimate recession-proof business. People, after all, get sick no matter what the economy does. And because management tends to target small product niches, it enjoys robust profit margins.
For shareholders, that translates into dependable dividends. Even through the 2008 financial crisis, Atrion boosted its distribution. Over the past decade, that payout has grown nearly sixfold.
With fears of a looming recession, dividend stocks have come back into vogue. And while most investors searching for income turn to traditional names like PepsiCo, Inc. (NASDAQ:PEP) or Procter & Gamble Co (NYSE:PG), many small-cap stocks deliver the same dividend potential. Atrion Corporation is one of the best.
And its growing dividend is not the only reason to buy this company. Over the next few years, we will see a huge boom in medical device spending.
Each day, 10,000 baby boomers turn 65. By 2050, analysts project the number of seniors living in this country will more than double. That means more tests, more prescriptions, and more doctor visits.
Atrion has already started to benefit from this boom. Earlier this year, management boosted the ATRI stock’s distribution 12.5%, signaling a lot of confidence in the future of the business. And just last quarter, the company reported profits jumped 16% year-over-year.
That trend will likely continue. Today, healthcare spending accounts for $0.18 of every dollar spent in the economy. That figure will rise to $0.22 over the next decade, according to the Centers for Medicare & Medicaid Services. That demographic shift provides a huge investment tailwind for firms like Atrion. (Source: “National Health Expenditure Accounts,” Centers for Medicare & Medicaid Services, last accessed December 14, 2018.)
Source: “Atrion Corporation (ATRI),” Yahoo Finance, lasy accessed December 14, 2018.
The Bottom Line on ATRI Stock
I don’t expect great returns from the stock market over the next few months. Slow earnings growth, higher interest rates, and a looming trade war could force the bulls to pull in their horns.
In markets like these, investors turn to wonderful, recession-proof businesses like Atrion Corporation. Analysts project this dividend would grow substantially over the coming years, regardless of what the economy does. I suspect that growing income stream will keep a firm bid underneath the ATRI stock price.
