Investors looking for a recession-proof stock should consider the health supplement company Jamieson Wellness (TSX:JWEL). From passive income to a stable footing in both the Canadian and the Chinese domestic retail markets, this stock is often overlooked by investors seeking exposure to dividend-paying healthcare companies. Selling at $20.57 a share and paying a small but perfectly formed dividend, it’s an affordable and rewarding play in the healthcare space.
A rare jewel of a stock
Paying a dividend yield of 1.75%, this stock won’t reward as quickly as a rival dividend payer, such as Big Five banker with a +5% yield, or the freakishly high 12% yield of Chemtrade. However, its position in a defensive sector and the solid niche it’s carved out for itself mean that the stock should be fairly low maintenance. Coupled with fairly low price volatility, this is therefore a soothing option for a long-term savings plan such as a TFSA or RRSP.
As a brand, Jamieson Wellness is respected, well-known, and pulls in a steady stream of revenue. Thanks to its ubiquity in the health foods and mineral supplements industry, the trend towards store controlled branding holds less water than it might do for a lesser business. Vitamins, minerals, supplements are a serious money-spinner, and with the Chinese market opening, investors have a secure, if not great-value play for long-term passive income.
The health kick is big business among the up and coming generations, as well as with health-conscious boomers, with Beyond Meat proving just how stratospheric a wellness-driven investment base can drive a stock. Jamieson Wellness is front and centre in this industry, with company insiders taking a punt on its outlook, essentially betting that its share price has even further to climb. Net income was up in 2019’s first quarter by a little over 12%, with some single-figure growth in revenue on the horizon.
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A defensive, diversified dividend payer
Investors bullish on an end to the Sino-American trade war should also keep a close eye on Jamieson Wellness’s share price. The green-capped bottles sell well in China, driving Jamieson Wellness overseas sales up by nearly 30%, and with the market-wide boost that would inevitably follow the end of the trade war, stocks with exposure to the Asian powerhouse may well go through the roof.
The cessation of U.S.-China tensions would likely see the Jamieson Wellness brand permanently buoyed, with long-term benefits for patient shareholders. Bringing in weather-proof profits from its familiar brands, such as Iron Vegan, Precision, LHVS, and Progressive covering sports nutrition to over-the-counter remedies, the company has also secured new product licences in China that will keep the company fresh and relevant both at home and abroad.
The bottom line
A sturdy stock that could outride a recession, Jamieson is extremely popular with consumers; it’s a brand that is likely to withstand whatever the economy can throw at it. By backing a familiar healthcare company with a stable footing both domestically and abroad, investors have a solid long-range play that can provide passive income for years to come.
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.
Fool contributor Victoria Hetherington has no position in any of the stocks mentioned. Chemtrade is a recommendation of Dividend Investor Canada.