The leader of a particular industry can be an appealing investment due to its market share, profit margins and brand power. The ASX blue-chip share Medibank Private Ltd (ASX: MPL) is an appealing ASX dividend share because of the impressive dividend yield.
Medibank is the leading private health insurance business in Australia, with its Medibank and ahm brands.
The recent FY26 half-year result showed a number of positive growth numbers, which bodes well for long-term growth of its dividend payouts.
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ASX blue-chip share's earnings recap
A key driver of value for the business is policyholder growth. Net resident policyholders grew by 1.9% (or 38,300) and net non-resident policy unit growth was 1,500 (or 0.4%).
The policyholder growth helped group revenue from external customers increase by 5.5% to $4.5 billion.
Health insurance operating profit rose 3.5% to $361.5 million, Medibank Health (a separate division) saw operating profit increase 28.5% to $48.3 million. This led to group operating profit increase 6% to $381.7 million.
Net profit after tax (NPAT) declined 11% to $302.9 million, though that was largely because of a reduction in the ASX blue-chip share's net investment income.
This helped fund a 6.4% increase in the interim dividend per share to 8.3 cents.
Is it a buy for the solid dividend yield?
The business continues growing its operating profit and this is a key driver for the dividend payments.
For the company, it's also pleasing to see that Medibank Health is growing with an "increase in community and acute reflecting strong volume growth and increase in ownership of Amplar Health Home Hospital and growth in wellbeing in line with increased Live Better members and financial wellbeing policies." The business has unlocked another growth avenue that offers defensive earnings.
Medibank is aiming to grow its market share in FY26 in a "disciplined way" in the resident health insurance market, though the industry is expected to see slower growth in FY26 compared to FY25. Non-resident health insurance aims to deliver solid gross profit growth.
Broker UBS is expecting steady earnings per share (EPS) and dividend growth from the business over the next few years. The broker forecasts that the annual dividend per share could be 19 cents in FY26, which translates into a potential grossed-up dividend yield of 6.2%, including franking credits.
The payout could rise again to 20 cents per share in FY27. This would be a grossed-up dividend yield of 6.5%, including franking credits.
For a ASX blue-chip share that's steadily growing the payout, I think this ASX blue-chip share is a solid opportunity.
