Is the Resmed share price a buy before the ex-dividend day?

Is this stock a healthy opportunity?

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The Resmed CDI (ASX: RMD) share price has now recovered from last year's sell-off relating to concerns about what weight loss drugs could have on demand at the ASX healthcare share. Is it a buy before the company's shares go ex-dividend?

As we can see on the chart below, it has risen by over 50% since 27 October 2024.

Ex-dividend date

The ex-dividend date tells us what the deadline is to buy shares to gain entitlement to the upcoming dividend.

Investors need to buy shares before the ex-dividend date to gain access to that dividend.

For Resmed, the shares will go ex-dividend on 8 May 2024, which is next Wednesday. That means investors need to own shares by the end of trading on Tuesday to receive the dividend.

The company is planning to pay a dividend of US 4.8 cents to investors on 13 June 2024. The dividend is 100% unfranked.

Holders of Resmed CDI shares will receive an equivalent amount in Australian dollar terms based on the exchange rate on the record date. Using the current exchange rate, the payment would be roughly AU 7.3 cents. That equates to a dividend yield of 0.2%.

Receiving a dividend is appealing, but I'm not sure the dividend alone is worth investing in a stock, particularly with the yield being so small.

It's important to take into account whether the valuation makes sense.

Resmed shares benefit from strong growth

The recent FY24 third-quarter update was good, with strong profit growth.

Revenue increased by 7% to $1.2 billion, the gross profit margin increased by 260 basis points to 57.9%, operating profit jumped 25% to $374.6 million, and net profit rose 29% to $300.5 million. It made operating cash flow of $402 million and debt repayments of $220 million.

Resmed talked of robust patient and customer demand for products and software 

The Resmed Chair and CEO is optimistic about the future:

Over 2 billion people worldwide can benefit from a ResMed solution to help them sleep better, breathe better, and receive best-in-class healthcare right where they live. We remain laser-focused on bringing market-leading innovation to customers, including our latest AirCurve11 range of non-invasive ventilators and our recently launched AirFit F40 mask system, combined with our entire portfolio of products, software, and solutions, allowing us to continue to deliver value for all our stakeholders.

Analysts are collectively quite bullish on the business. According to Commsec, there are currently 18 buy ratings on Resmed shares, with six hold ratings and one sell.

Although the Resmed share price is not as good value as it was six months ago, the ASX healthcare share seems to have a promising future.

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended ResMed. The Motley Fool Australia has positions in and has recommended ResMed. 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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