Medibank shares are currently trading on a 4% dividend yield. How does this compare to NIB?

Medibank vs. NIB… who wins when it comes to dividends?

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Key points

  • Medibank has long been an ASX dividend heavyweight 
  • The company has paid out semi-annual dividends every year since 2014 
  • But how does the Medibank dividend stack up against rival NIB? 

Ever since the Medibank Private Ltd (ASX: MPL) share price was first listed on the ASX boards back in 2014, the company has made a name for itself as a strong and consistent dividend payer.

Medibank use to be a government-owned company. But this changed when it was privatised in 2014 and subsequently listed on the ASX. Today, Medibank competes on a level playing field as a private company against its rivals in the health insurance business.

So on the surface, Medibank has built itself quite an impressive track record as an ASX dividend share. It began paying dividends to shareholders right off the bat in 2015 and increased its annual dividend payments every single year between 2015 and 2019. 2019 saw the company’s payouts peak at 15.6 cents per share.

But the pandemic has had an impact on this track record, and in 2020 Medibank cut its dividend for the first time. It doled out a total of 12 cents per share in 2020 and only slightly raised this in 2021 to 12.7 cents per share.

In 2022 thus far, Medibank has paid an interim dividend of 6.1 cents per share, fully franked. That was an increase on 2021’s interim payment of 5.8 cents per share, but not quite as high as the company’s last final dividend. That was a payment of 6.9 cents per share, also fully franked, that investors received back in September last year.

So this means that Medibank’s last two dividends were the interim dividend of 6.1 cents from March and the final dividend of 6.9 cents from last year.

Together, that’s an annual trailing dividend of 13 cents per share. On the current Medibank share price of $3.46 (at the time of writing), this gives the company a trailing yield of 3.76%.

How does the Medibank dividend stack up?

So how does this yield compare to Medibank’s largest ASX-listed rival NIB Holdings Limited (ASX: NHF)? NIB’s dividends have followed a similar upward trajectory over the past few years (including a 2020 dip).

The company’s last two dividend payments were an interim dividend of 11 cents per share, fully franked, from March. As well as the final dividend of 14 cents per share, also fully franked, that investors received last year.

Together, these two payments give NIB shares a trailing dividend yield of 3.43% on current pricing.

So we have Medibank with a 3.76% yield, and NIB with a yield of 3.43%. So clearly Medibank comes out on top in the dividend stakes today. Interestingly, Medibank trades at a higher price-to-earnings (P/E) ratio than NIB today.

Medibank’s current P/E ratio is 22.03, which is higher than NIB’s current ratio of 18.94. If both companies commanded the same P/E, the gap between both companies’ dividend yields would be even greater.

Something to consider for any income investor evaluating the Medibank share price today.

Motley Fool contributor Sebastian Bowen 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 NIB Holdings Limited. 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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