Investors may be interested in Medibank Private Ltd (ASX: MPL) shares for dividends because of the company's stability and track record.
The ASX healthcare share has an impressive history. It has grown its dividend almost every year since it was listed almost a decade ago. FY20 was the only year that didn't see an increase.
Latest Medibank dividend payments
Despite troubles related to a cyber-attack in October 2022, the private health insurer had a solid FY23.
Revenue from external customers increased 3.2% to $7.35 billion. Operating profit rose 9% to $647.5 million, and net profit after tax (NPAT) increased 29.8% to $511.1 million.
While Medibank Private suffered a $46.4 million cost blowout as a result of the cybercrime, it benefited from $138.6 million of net investment income.
The company was able to increase its dividend per share by 9% to 14.6 cents per share, and the dividend payout ratio reduced from 84.8% to 80.5%.
At the current Medibank share price, it offers a grossed-up dividend yield of 5.9%.
What's the likelihood of increases?
In FY24, the company aims to achieve 1.5% to 2% resident policyholder growth in FY24. That could be a helpful driver for revenue and earnings because more policyholders may mean a better operating profit.
Medibank is targeting $20 million of productivity savings across FY24 and FY25.
However, the private health insurer said it expected an underlying claims per policy unit growth of 2.6%.
And the company anticipates cybercrime costs of between $30 million to $35 million in FY24 for a further IT security uplift and legal and other costs related to regulatory investigations and litigation. This guidance doesn't include the impacts of any potential findings or outcomes from regulatory investigations or litigation.
Medibank dividend forecast
Commsec estimates the company to grow its annual dividend by 8.2% in FY24 to 15.8 cents per share. This would be a grossed-up dividend yield of 6.4% — a very healthy growth.
In FY25, the ASX healthcare share could grow its annual dividend per share by another 7% to 16.9 cents, equating to a grossed-up dividend yield of 6.8%.
What this suggests is that dividend growth could continue. In the current 2024 financial year, Medibank Private could pay the largest dividend per share of its history, with an even larger payout in FY25.
We don't know what's going to happen with the Medibank share price, particularly in the unpredictable short term. But, it appears the dividend has a good chance of growth (though that's not guaranteed either).
