The S&P/ASX 200 Index (ASX: XJO) share Medibank Private Limited (ASX: MPL) is expected to pay an increasingly attractive dividend in the next few years.
The ASX healthcare share has been through plenty of difficulties with a cyberattack. However, the Medibank share price has been steadily climbing since hitting a low after the sell-off.
Despite the rise in the share price, the private healthcare business is still projected to pay a sizeable dividend yield this year and beyond.
Ongoing growth
In the recent half-year result, the business saw a number of growth numbers, despite concerns about what could happen after the cyber attack.
It revealed that group net profit after tax (NPAT) rose 5.9% to $233.3 million despite cybercrime costs of $26.2 million, net resident policyholders grew 1,700 (or 0.7%) and net non-resident policy units grew by 33,400 (or 17%). The health insurance operating profit increased 8.7% to $305.2 million. Medibank also increased its interim dividend by 3.3% to 6.3 cents per share.
It said that more normal business operations resumed in January, with "early signs of improvement in policyholder trajectory". In the month up to 18 February, it saw net growth of 200.
The ASX 200 share also reported that the resident health insurance market remained "buoyant" with growing numbers of younger adults and those taking out cover for the first time despite the challenging economic conditions.
Dividend expectations
According to projections on Commsec, the business is expected to pay an annual dividend per share of 14 cents in FY23. This would be a grossed-up dividend yield of 5.8%.
The dividend could then grow by 11.4% to an annual payment of 15.6 cents per share. This would be a grossed-up dividend yield of 6.5%.
Commsec projections suggest that the ASX 200 share's dividend could grow by another 2.6% to 16 cents per share in FY25. This would be a grossed-up dividend yield of 6.7%, almost reaching that 7% level.
Foolish takeaway
Dividends are not guaranteed. But, if Medibank can keep increasing its profit then the dividend can keep increasing as well.
