Could this 7%-yielding ASX healthcare share be a growth winner?

Sonic Healthcare Ltd (ASX: SHL) shares were stationary at $19.54 during Tuesday trading, but the ASX healthcare share has had a rough run. Sonic is down 11% over the past month, 14% year to date and 18% over the past 12 months.

That weakness could be catching the attention of passive income investors. But can this healthcare giant also deliver meaningful earnings growth?

Growth remains a key attraction

Sonic Healthcare is the largest private medical laboratory and pathology services operator in Australia, the United Kingdom, Germany and Switzerland. It is also a major provider of diagnostic imaging in Australia and the country's largest medical centre operator.

The company's FY26 result was impressive despite ongoing economic uncertainty. Revenue rose 13% to $10.9 billion, underlying EBITDA climbed 11% to $1.9 billion, while underlying earnings per share (EPS) increased 14% to $1.256.

There are reasons to believe demand can continue growing. Sonic operates in markets with ageing and growing populations, potentially supporting long-term demand for pathology, diagnostics and medical services.

Acquisitions provide another avenue for growth. The $10 billion ASX healthcare share has focused on expanding its European operations, with acquisitions helping increase its scale and potentially improve profit margins.

For investors, sustained profit growth is particularly important because earnings ultimately fund dividends.

A compelling dividend history

There aren't many ASX companies with a dividend track record quite like Sonic Healthcare's.

The ASX healthcare share has paid dividends since 1994 and has increased its payout almost every year since then. The only exceptions were 2011 and 2012, when Sonic maintained its dividend.

In FY26, Sonic continued its progressive dividend policy, increasing the payout by 1 cent per share to $1.08. Based on the current share price, that represents a dividend yield of approximately 5.4% before franking credits, or around 7% including franking credits.

That's an attractive income proposition if Sonic can continue growing earnings and supporting its progressive dividend policy.

What do brokers think?

Sonic isn't universally viewed as a buy. TradingView data shows 10 of 18 brokers rate the ASX healthcare share a hold, while four rate it a buy or strong buy and four have a sell or strong sell recommendation.

The average 12-month price target is $22.11, implying potential upside of roughly 13% from the current share price.

Bell Potter is more bullish. The broker maintained its buy rating after reviewing Sonic's FY26 results, although it reduced its 12-month price target from $28.75 to $27.50.

Even after that downgrade, the target implies potential upside of around 40%.

Is Sonic Healthcare a buy?

At roughly 16 times earnings, Sonic Healthcare doesn't appear excessively valued given its defensive operations, impressive dividend history and potential for long-term earnings growth.

The combination of a 7% fully franked-equivalent yield and potential earnings growth makes Sonic an ASX healthcare share income-focused investors may want to consider.

The post Could this 7%-yielding ASX healthcare share be a growth winner? appeared first on The Motley Fool Australia.

Motley Fool contributor Marc Van Dinther has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Sonic Healthcare. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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