THQ: Healthcare Gets A Boost, Play It With This 7%+ Distribution

Summary

• After years of sub-par performance out of healthcare-related names, we get a bit of clarity on regulations for a boost to the sector.
• THQ is an attractive way to play this sector, with a distribution rate of 7.34%.
• The fund's discount is currently a bit steeper than its one-year average.
• Looking for a helping hand in the market? Members of CEF/ETF Income Laboratory get exclusive ideas and guidance to navigate any climate. Get started today »

The Tekla Healthcare Opportunities Fund (NYSE:THQ) has been one of my go-to funds for exposure to the healthcare sector. This actively managed fund has been able to give an investor exposure to some of the largest and bluest names the healthcare sector has to offer. All this, while providing an attractive and sustainable distribution. The current distribution rate sits at 7.34%. THQ also is still offering an attractive entry valuation, even as the sector as a whole received some welcome news from the current White House administration.

President Trump had announced two new potential regulations on the industry about transparency in pricing. The "Transparency in Coverage" rule would be where the word "potential" comes in. There could be several changes and modifications to the ruling when it is finalized. This regulation would put power into the hands of the consumer in a way that discloses prices to make an informed decision. We get pricing on all of our other goods and services, healthcare should be the same. This should open up competition amongst all the players in the healthcare industry.

The rule that is being finalized starting in 2021 also helps add transparency. It requires that hospitals standardize information to consumers. This will allow the consumer to make an informed decision about where they choose to receive procedures. Additionally, hospitals will be required to make public negotiated prices for "300 common shoppable services in a manner that is consumer-friendly and update the information at least annually."

This is welcome news both for consumers and the healthcare industry alike. This is positive because consumers can make better-informed decisions and have access to pricing information that was open and clear before. This is also a win for the healthcare industry on two fronts; the fact that the regulation didn't go as far as some participants

Analyst’s Disclosure:I am/we are long THQ, HQH, ABBV, UNH. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.