ISA investors! A top dividend growth stock I’d buy for 2020 and hold for 25 years

This dividend hero is a brilliant pick for your Stocks & Shares ISA for next year and well beyond, believes Royston Wild, who gives the lowdown on the income champion.

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Assura (LSE: AGR) might not have the storied history of dividend growth as some other London-quoted shares, though this is because it’s only been quoted on London markets since 2015.

But it’s raised the full-year payout every year since and, last time out, by a chubby 8% in the fiscal year. It also looks on course to keep growing rewards for some time too.

But what makes Assura — which designs, develops and manages primary healthcare facilities the length and breadth of the UK — such a great dividend pick for 2020 in particular, you might ask? A quick look at the company’s share price shows why. The FTSE 250 firm HAS gained 40% in value since the turn of January.

It’s true that a string of positive trading releases in the year to date have whetted share buyers’s appetite. Though, to a large extent, this whopping share price rise pays testament to the defensive appeal of healthcare stocks in tense geopolitical and macroeconomic times as these.

And it’s likely that safe-haven demand will remain solid next year as Brexit rolls on, President Trump’s impeachment proceedings roll on, and Chinese trade wars keep hampering global economic growth.

Help the aged

Right now, though, let me explain why I think Assura is a great buy beyond the next 12 months. Simply put, Britain’s expanding population — and in particular a rapidly-swelling elderly community — means the demand for primary healthcare facilities like GP surgeries is likely to grow and grow.

A recent report from the Office for National Statistics suggests “there are projected to be many more people at older ages” over the next quarter of a century, thanks to a combination of rising life expectations and the 1960s ‘baby boomer’ generation reaching their autumn years. In particular, it expects the number of over-85s to hit 3.2m by 2041, double the number in this age group 25 years earlier.

Obviously, this should continue to put increased strain on the country’s existing network of health clinics and will require many more such units to be built and for widescale regeneration of existing facilities.

~4% dividend yields

What’s more, Assura is expanding rapidly to capitalise on this fertile environment. It announced it has “had a very active first six months of the reporting year [to March 2020],” the business making nine acquisitions and completing two developments. It plans to maintain this breakneck pace too, with acquisition and development pipelines currently sitting at £65m and £72m, respectively.

No wonder City analysts expect profits to keep ticking higher, with rises of 6% and 8% forecasted for fiscal 2020 and 2021, respectively. And, as I said at the top of the piece, this leads to predictions of more dividend growth, resulting in annual yields of 3.8% for this year and 3.9% for next.

Sure there’s bigger yields out there. But I reckon the prospect of bumper dividend cheques as earnings and payouts steadily grow still makes Assura a hot income share to buy today.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be considered so you should consider taking independent financial advice.

Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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