The ASX healthcare share sector is suffering through a difficult period following challenging conditions driven by competition and other factors. CSL Ltd (ASX: CSL) and Cochlear Ltd (ASX: COH) are just two of the names that have suffered major declines. But, amid the pain, there could be a great dividend opportunity in the sector.
Medibank Private Ltd (ASX: MPL) may not be viewed as one of the most appealing blue-chip ASX dividend shares out there. But, it offers both a good dividend yield and regular dividend growth, which is a powerful combination for passive income.
Let's look at those dividend positives.
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Good dividend yield
The ASX healthcare share is forecast to deliver a larger dividend in the 2026 financial year, with a projected annual payment of 19.9 cents per share.
At the time of writing, that translates into a potential forward grossed-up dividend yield of 6.2%, including franking credits. Excluding franking credits, that's a dividend yield of 4.3%.
That's an attractive level of potential income. For me, I'd take that over a term deposit offering a fixed level of income.
Regular dividend growth
Since the business started paying a dividend per share in 2015, the business has regularly increased its payout. In fact, every year since then, there has only been one year (2020) when it didn't increase its annual dividend per share, which is a great track record.
Dividend growth is not guaranteed, of course. But, the business has demonstrated an impressive ability to frequently increase its earnings each reporting period, while also increasing the dividend.
Is Medibank a buy?
According to CMC Invest, of seven ratings on the business, only two rate it as a buy and the other five ratings are holds.
However, the average price target of $5.11 suggests a possible rise of around 10% over the next 12 months. We can add the potential dividends to that possible return.
In a recent business update, the ASX healthcare share highlighted that APRA's quarterly private health insurance statistics showed industry growth of 2.1% in the 12 months to 31 December 2025, which is a small but pleasing tailwind for policyholder growth. Medibank reported 1.1% growth in the nine months to March 2026.
Medibank noted that increasing participation among younger cohorts continues to support ongoing affordability and long-term industry sustainability, even if competition has increased.
The business appears to have defensive earnings – it highlighted that during periods of economic pressure, policyholders tend to prioritise private health insurance.
Medibank also noted that non-resident growth in student and worker segments saw growth in the FY26 third-quarter. This growth reflects improved lifecycle management and a greater focus on direct and digital consumer wins.
Finally, the Medibank Health business continues to grow in size at a pleasing rate – it saw operating profit growth of 30% in the third quarter of FY26 compared to the same period in FY25.
Overall, I think the ASX healthcare share would be a good one to buy for passive income and it has a promising future, though it's not the only business I'd buy for dividends.
