How big will the Medibank dividend be in 2022?

Investors may be wondering how large the Medibank dividend yield is going to be.
The post How big will the Medibank dividend be in 2022? appeared first on The Motley Fool Australia. –

Shareholders of Medibank Private Limited (ASX: MPL) may be wondering how large the Medibank dividend and dividend yield is going to be in 2022.

For readers who don’t know, Medibank is the largest private health insurance business on the ASX. It operates through the brands Medibank and AHM. At 30 April 2022, Medibank had 1,932,000 resident policyholders.

How big is the 2022 Medibank dividend going to be?

Let’s start with what we already know.

Medibank’s board decided to declare an interim dividend of 6.1 cents per share for the first half of FY22. This represented a dividend payout ratio of 79.1% of the underlying earnings per share (EPS). In HY22, the dividend was increased by 5.2% while the underlying EPS rose by 4.4%.

According to estimates at Commsec, Medibank could pay an annual dividend per share of 13.1 cents in 2022. That translates into a projected grossed-up dividend yield of 5.9% at the current Medibank share price.

Commsec numbers imply further growth of the Medibank dividend in the coming years. In FY23, Medibank is expected to pay an annual dividend of 14 cents per share and then 14.4 cents in FY24. That equates to forward dividend yields of 6.3% and 6.5%.

The broker Citi is expecting an even bigger dividend from Medibank. It thinks the private health insurance ASX share could pay a grossed-up dividend yield of 6.1% in FY22 and 6.5% in FY23.

What progress is Medibank making?

The company recently said at an investor conference that private health insurance participation growth remains “strong”.

Medibank said there has reportedly been a shift in customer attitudes towards private health insurance. The company claims private coverage is seen as attractive “given concerns about public hospital wait times”. It’s also seen as more affordable and better value than in the past, which is supporting improved retention.

Medibank noted that there has been six consecutive quarters of industry policyholder growth. Rolling 12-month policyholder growth increased from 2.68% in September 2021 to 2.79% in December 2021. The company said that new-to-industry and younger cohorts are “major contributors” to the growth, which Medibank suggested shows positive signs for industry sustainability.

The industry participation growth is expected to be higher than pre-pandemic levels over the medium-term. However, management said affordability is still key to maintaining growth.

Outlook comments can have an influence on the Medibank share price and may give an indication of business performance. This could also provide some guidance on profitability and the Medibank dividend.

In FY22 to April 2022, the business has seen resident policyholder growth of 2.3%. It’s aiming to see policyholder growth of between 3.1% to 3.3%, including continued growth in the Medibank brand.

The underlying average net claims expense per policy unit is forecast to be approximately 2.3% among resident policyholders in FY22.

Is the Medibank share price a buy?

Citi currently rates the business as a buy, with a price target of $3.65. That implies a potential rise of the Medibank share price of more than 10% over the next year.

The broker noted that the ASX share could make acquisitions.

The post How big will the Medibank dividend be in 2022? appeared first on The Motley Fool Australia.

Should you invest $1,000 in Medibank right now?

Before you consider Medibank, you’ll want to hear this.

Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now… and Medibank wasn’t one of them.

The online investing service he’s run for over a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.

*Returns as of January 13th 2022

More reading

The Medibank share price has leapt 5% in a month. Could it be on the comeback trail in May?
This ASX 200 healthcare share has a fully franked dividend yield over 4% right now
Why is the Medibank share price trailing NIB over the past year?

Citigroup is an advertising partner of The Ascent, a Motley Fool company. 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 no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Trade The World Anywhere & Anytime!

Mobile app platform with over 50,000 global listed securities across 12 markets (over 70% global market capitalisation), right from your Android or iOS device.

Integrated with exclusive trading idea and investment analysis tools to help you find actionable insight on virtually every financial instrument across our 12 global markets, to help you optimise your trading strategies.

Refer Your Friends

Tell your friends about Monex and gift them FREE access to our trading tools.

  • This field is for validation purposes and should be left unchanged.

We respect your privacy and will only send this one email notification to your friends. 

Share With Your Friends

Share on facebook
Share on twitter
Share on linkedin

Monex Trading Tools Access and Usage Terms

The Monex Trading Tools (referred to as ‘tools’ hereafter) are available to you inside your client portal;

To activate access to the tools, you must have a verified and approved trading account and have made a deposit of at least AUD $1000.

An active and funded account with a positive trading balance is required to continue to have access to the tools;

Although the tools are available to you indefinitely, Monex Securities may at it’s discretion disable access to the tools in the future;

Monex securities reserves the right to change these terms and conditions from time to time, as it sees fit, without notice.

Important Notice
iOS & Android - 12 International Markets & Over 70% Global Market Cap. $0 Brokerage On US & HK* Trades. Click Here!