Anyone who owns Medibank Private Ltd (ASX: MPL) shares today and has held them since 28 February 2024 is getting a useful boost today.
A few weeks ago the company reported its FY24 half-year result, which came with a number of pleasing positives.
One of the main things shareholders can take from the half-year report is a nice, big dividend.
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Medibank pays its dividend
The board of directors for Medibank decided to declare a fully franked interim dividend of 7.2 cents, which is being paid today. That represented an increased payout that was 14.3% bigger than last year.
Medibank's payment equated to a dividend payout ratio of 75.5% of underlying net profit after tax (NPAT). This measure 'normalises' for investment market returns. The company has an annual target payout range of between 75% to 85% of underlying NPAT.
At the current Medibank share price, this payout represents a grossed-up dividend yield of 2.7%.
Growth reported
The HY24 result was solid enough – group revenue from external customers increased 3.3%, while health insurance operating profit rose 4.3% to $317 million. Underlying NPAT rose 16.3% to $262.5 million and statutory net profit grew 103.2% to $343.2 million. Part of the profit increase was because of a 49.6% jump in net investment income.
Medibank reported its net resident policyholders grew by 3,400 (or 0.2%), while net non-resident policies grew by 33,800 (or 12.3%).
Future profitability will be key for ensuring the Medibank dividend can keep rising. It's expecting a "moderation in resident industry growth" in FY24 compared to FY23. The business is aiming to achieve between 1.2% to 1.5% resident policyholder growth in FY24. It's expecting a return to market share growth in the second half of FY24.
Projected Medibank dividend yield
According to the estimate on Commsec, owners of Medibank shares could get a grossed-up dividend yield of 6% in FY24.
