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A safe-haven stock with big dividends that I’d buy for my ISA

With financial markets set to remain volatile for some time yet, loading up on stable safe-haven stocks continues to be a good idea. Assura (LSE: AGR) is one such share I’d happily stash my ISA cash into.

Healthcare stocks are some of those most popular targets when the economy is beginning to flag. We still need drugs and critical medical services irrespective of whatever troubles are raging outside our windows. And as a creator and manager of general practitioner (or GP) surgeries and other primary healthcare facilities, this particular FTSE 250 stock is a wise buy for ISA investors in these troubled times. News in early April that “March quarter rents [are] being received in line with normal patterns” underlined the robustness of the company’s operations.

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Don’t think of Assura as a stodgy defensive pick, though. Through its aggressive expansion policy, it’s putting itself in the box seat to capitalise on the UK’s ageing population and turbocharge profits growth. A mix of acquisition activity and new developments meant that it had 576 properties on its books as of December. This represented an increase of 13 from end of 2018.

Estimates show that half of Britain’s GP surgeries are not fit for purpose. The demand outlook for Assura’s state-of-the-art properties looks quite bright for the next few decades then.

A perky pipeline

Now, the Covid-19 outbreak threatens to put the brakes on Assura’s grand plans. In last month’s update, the healthcare firm advised that it is following government lockdown advice concerning its construction sites. And as a consequence, it said that it’s “prepared for delays to anticipated completion dates for our on-site developments and start dates of the immediate pipeline.”

This is a mere hindrance to the FTSE 250 firm’s growth strategy, of course, rather than a critical development. In fact Assura’s pipeline remains quite mighty. On the acquisition side, its immediate pipeline stands at £67m, while its corresponding development pipeline sits at £77m. It’s in great shape to keep expanding its estate once lockdown measures are eased.

What’s more, a recent share placing saw the property giant raise £185m last month. The move gives it scope to transact an extra £250m of property additions before the group’s loan-to-value level hits the 40% marker, a level that could see its corporate rating take a hit.

A terrific ISA buy

In the meantime, City analysts expect the healthcare play to grow annual earnings by single-digit percentages. They forecast rises of 1% and 6% for the fiscal years to March 2021 and 2022 respectively. Predictions of more profits growth underpin expectations of more dividend growth too. Thus yields sit at a chunky 3.7% and 3.9% for this year and next.

Assura commands a princely premium at current prices around 80p. A price-to-earnings (P/E) ratio of 28 times illustrates this point. But don’t turn your nose up. I reckon the firm’s safe-haven qualities, coupled with its exciting growth strategy, merit a hefty price tag. I’d happily add it to my own ISA.

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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.