The Medibank (ASX:MPL) share price is now trading on a forecast 3.76% fully franked dividend yield

Is it worth buying the health insurance company’s shares for its dividend?

| More on:
healthcare asx share price rise represented by happy doctor

Image source: Getty Images

The Medibank Private Ltd (ASX: MPL) share price has travelled 20% higher over the past year. This comes as the private health insurance giant has enjoyed improved trading conditions within the industry.

This morning, Medibank shares were touching a new 52-week high of $3.45, up 1.17%. However, they have partially retreated are now trading hands at $3.42, a gain of 0.29% on yesterday’s closing price.

Why is the Medibank share price pushing higher?

Investors are pushing up the Medibank share price despite no news coming from the company since its last release in late June.

According to the update, Medibank returned roughly $105 million in COVID-19 savings to customers through premium relief. The latest financial support package has boosted the company鈥檚 reputation in becoming socially responsible.

Medibank CEO David Koczkar commented:

We said right from the start of the pandemic that we would not profit from COVID-19, and that we were committed to returning any COVID-19 savings back to our customers because it is the right thing to do. And today鈥檚 announcement shows that we have done what we said we would.

The Medibank share price jumped into the green on the news.

Furthermore, Medibank advised that the give-back program is not expected to impact its operating earnings for the 2021 financial year.

One broker who retained its outperform rating was leading financial services company, Credit Suisse. The agency raised its price target for Medibank shares to $3.50 on the back of increased earnings estimates for FY21.

How much is Medibank forecasted to pay in dividends?

With the company scheduled to report its full-year results on 25 August, investors may be wondering about the dividend payments.

Medibank paid a fully franked dividend of 5.8 cents in March for H1 FY21, slightly below the 6.3 cents in the prior period.

However, Credit Suisse is forecasting a total FY21 dividend payment of 13 cents, implying a 7.2 cents per share dividend payment. This would give Medibank a current dividend yield of 3.76%. Not a bad return when including the strong Medibank share price rise.

Should you invest $1,000 in Medibank right now?

Before you consider Medibank, you'll want to hear this.

Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now... and Medibank wasn't one of them.

The online investing service he鈥檚 run for nearly a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.

*Returns as of August 16th 2021

Motley Fool contributor Aaron Teboneras 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 no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on 鈴革笍 Dividend Yields