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Utah Medical Products, Inc. (NASDAQ:UTMD) will pay a dividend of $0.295 on the 6th of July. This means that the annual payment will be 1.3% of the current stock price, which is in line with the average for the industry.
View our latest analysis for Utah Medical Products
Utah Medical Products' Dividend Is Well Covered By Earnings
We like to see a healthy dividend yield, but that is only helpful to us if the payment can continue. However, Utah Medical Products' earnings easily cover the dividend. As a result, a large proportion of what it earned was being reinvested back into the business.
Looking forward, earnings per share could rise by 14.2% over the next year if the trend from the last few years continues. If the dividend continues on this path, the payout ratio could be 21% by next year, which we think can be pretty sustainable going forward.
Utah Medical Products Has A Solid Track Record
The company has an extended history of paying stable dividends. The annual payment during the last 10 years was $0.96 in 2013, and the most recent fiscal year payment was $1.18. This implies that the company grew its distributions at a yearly rate of about 2.1% over that duration. While the consistency in the dividend payments is impressive, we think the relatively slow rate of growth is less attractive.
The Dividend Looks Likely To Grow
Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. Utah Medical Products has seen EPS rising for the last five years, at 14% per annum. With a decent amount of growth and a low payout ratio, we think this bodes well for Utah Medical Products' prospects of growing its dividend payments in the future.
We Really Like Utah Medical Products' Dividend
Overall, we think that this is a great income investment, and we think that maintaining the dividend this year may have been a conservative choice. Distributions are quite easily covered by earnings, which are also being converted to cash flows. All of these factors considered, we think this has solid potential as a dividend stock.
Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. See if management have their own wealth at stake, by checking insider shareholdings in Utah Medical Products stock. Is Utah Medical Products not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.