Specimens and Medical Imaging – CML Healthcare

Looking for a safe place to park some money and generate steady returns? Back in June, I profiled and recommended CML Healthcare Income Fund. Since then, it has risen about 6% and paid monthly distributions of about 8 cents a unit (adding an additional 3% ontop of the 6% unit price increase for a decent six month increase of about 9%). CML Healthcare Income Fund is still a good investment today.

Check-out CML on Google Finance

CML recently reported revenue of $78.1 million, beating most expectations. RBC maintains their outperform rating "based on management's continued execution and ability to make accretive acquisitions." As pointed out by RBC, the current payout ratio (Income Trusts do not invest cash but rather pay it out to unit-holders in regularly scheduled distributions) is about 84% and the company has indicated it has a long-term goal of paying out in the low 90% range. This likely means higher distributions for unit holders in the future.

RBC has a price target of $17.50.

The market for Specimens and Medical Imaging is not going away – if anything, there is strong commitment from Provincial government in Ontario to decrease wait-times for medical imaging, and thus this means more business for CML.

Bottom line is that this is an ultra-safe investment with a decent return.

DISCLOSURE: I own units of CML Healthcare Income Trust. No matter how safe this investment is, there is always risk involved. Like crossing the street, keep your eyes and ears open.

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