MIDAS SHARE TIPS: Yew Grove cashing in on Ireland’s booming medical technology sector

Medical technology is big business. Annual sales topped £350 billion even before the coronavirus pandemic, and Ireland is one of the foremost players in the field. 

Activity is concentrated around Limerick, Galway and Athlone, which between them form the biggest medical technology hub in Europe. 

Some firms are homegrown. Many more are multi-nationals, choosing Ireland as their European hub because the workforce is highly educated, the government is welcoming and taxation is low. These companies need decent, well-located places to work and Yew Grove, a Dublin and AIM-listed business, provides them. 

The shares are denominated in euros, priced at 88 cents (77p) and should increase in value over the next few years. Importantly, too, Yew Grove pays quarterly dividends and last week directors approved a 1.2 cent payment for the three months to March. 

Equivalent to 1.05p for UK investors, the dividend will be paid on May 6 to all shareholders on the register by April 24. Rising payments are likely during the year, with brokers expecting a total 2020 payout of at least 5.5 cents (4.8p), putting the stock on a yield of more than 6 per cent. 

Yew Grove was founded in 2014 when chief executive Jonathan Laredo spotted a gap in the Irish market. A former banker with 27 years of investment experience, he saw that professional property firms in Ireland focused almost exclusively on Dublin, even though half the multinationals in the country are located outside the capital. 

With a group of like-minded individuals, Laredo started to buy commercial property in key locations around Ireland, creating a portfolio of assets before floating on the stock market in 2018. Today, Yew Grove owns 27 properties, with a combined value of over £100 million. 

From the start, Laredo and his team were determined to focus on high-quality tenants who were likely to stick around and could be relied upon to pay their rent. The group has stayed true to that initial plan. Just over a quarter of Yew’s tenants are government bodies, such as the Electricity Supply Board. 

Most of the rest are major corporations, focused around medical technology, pharmaceuticals and healthcare more broadly. And small businesses make up less than 5 per cent of the rent roll. 

This spread of tenants gives Yew Grove an edge in the current crisis. In the three months to March 31, every tenant paid their rent on time and in full and in the quarter to June, the group expects to collect more than 95 per cent of the rent on time, with a similar percentage forecast for the rest of the year. 

Looking ahead, Laredo is ambitious. Initially, he hoped to more than double Yew’s portfolio by the end of next year. That timetable will almost certainly be delayed, as Covid-19 has stopped property markets in their tracks, but the direction of travel remains the same. 

There may even be some bargains on offer, once the virus has abated and, as the business grows, profits will rise and dividends increase.

MIDAS VERDICT: Yew Grove was founded primarily to provide investors with steady income, in the form of generous dividends. In today’s markets, that focus is more attractive than ever. At 88 cents, the shares make for a solid, long-term investment. 

Traded on: AIM Ticker: YEW Contact: ygreit.com or 00 353 1 485 3950