Can the Medibank Private Ltd (ASX: MPL) share price really deliver both capital growth and healthy dividends going forward? Good question.
Looking at this ASX 200 health insurance share's past performance, one might be forgiven for just assuming so. Since it was privatised back in late 2014, the Medibank share price has risen a robust 70% or so.
That works out to be a rough compounded annual growth rate of almost 7% per annum.
But Medibank has also delivered some pleasing dividend performance since it floated on the ASX as well.
In 2015, the company paid out a total of 5.3 cents per share in dividends. But Medibank spent the next few years ratcheting this up, and by 2019, it was doling out an annual dividend worth 15.6 cents per share.
The company's payouts have taken a COVID-induced hit in recent years. But even so, Medibank doles out a total of 12.7 cents per share in 2021.
Its latest dividend, the final payment that investors will receive on 29 September, will be worth 7.3 cents per share. That's a pleasing 5.8% rise over last year's final dividend of 6.9 cents per share.
But, as any investor worth their salt knows, past performance is no guarantee of future success.
So what are the chances of Medibank continuing to deliver both healthy growth and dividends going forward?
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Is the Medibank share price poised to deliver both growth and dividends?
Well, yes. That's the view of at least one ASX broker anyway.
As my Fool colleague James covered this morning, ASX broker Citi has just come out with a buy rating for Medibank shares. Citi has given Medibank a 12-month share price target of $4. That implies a potential upside of around 8.5% over the coming year.
Citi's bullishness comes from a positive reading of Medibank's latest earnings report, which covered FY22. It reckons higher interest rates going forward will assist the company's performance over FY23. So that's share price growth covered.
But Citi is also expecting the dividends from Medibank to keep on coming as well. The broker is pencilling in dividends of 15.9 cents per share covering FY23 and 16,3 cents per share for FY24.
So yes, Citi is expecting both share price growth and higher dividends from Medibank Private shares going forward. But, time will only tell if these predictions prove accurate.
In the meantime, the current Medibank share price gives this ASX 200 insurer a market capitalisation of $10.16 billion, with a dividend yield of 3.63%.
