Cheap Stocks to Buy: The Female Health Co. (FHCO)
Market Cap: $200 million
The Female Health Co. (FHCO) is a very small stock that averages about 150,000 shares daily — so make sure you understand the potential for volatility before you even consider investing. But the strangeness of this stock makes it too enticing to leave out.
Female Health’s main business is reducing risk for women through consumer health products, primarily the FC2 female condom. And it’s a good business, too — Female Health is soundly profitable and has partnerships with institutions like public health clinics and not-for-profits.
Whatever you think about the product, the stock has paid a dividend like clockwork since 2010, increasing it to 7 cents quarterly last year for a yield of more than 4%. Sustained sales and profits since the company went public in 2009 show that while it hasn’t created a breakout product, FHCO can at least deliver consistent enough income to deliver a steady dividend.
And since FHCO is paying about half of next year’s expected earnings in dividends, the payout is sustainable enough to make investors feel comfortable with a 4% yield going forward. Shares are flat in the last year or so, but given the nice income, there is a good hedge against further volatility in this long-term healthcare play.