Is the Medibank Private (ASX:MPL) share price a buy for its fully franked dividend yield?

1587

The Medibank Private (ASX:MPL) share price has gained just 4.5 per cent over the past 12 months, slightly ahead of the 3.1 per cent gain in the ASX 200 index over the same period.

Medibank shares currently trade at $2.89, below its 52-week high of $3.39.

In February, Medibank reported profits increased 6 per cent to $246 million, with Chief Executive Officer Craig Drummond saying the company is now positioning for growth which will allow it to leverage its scale to build the core business and transform into a broader health services company.

The Medibank interim fully franked dividend was 5.5 cents, an increase of 4.8 per cent over the previous year.

Last month analysts at Goldman Sachs retained their sell rating on Medibank shares and a $2.70 share price target. The broker said it remains negative on the private health insurance industry due largely to affordability headwinds and political uncertainty.

Medibank dividend

The Medibank dividend has been growing steadily since the company floated on the ASX.

On a trailing basis, Medibank Private shares trade on a fully franked dividend yield of 4.2 per cent, or 6.1 per cent when grossed up for franking credits.

The Medibank dividend yield is relatively attractive, especially given interest rates are likely to remain at these current low levels well into 2019.

By comparison, the NIB Holdings (ASX:NHF) share price trades on a fully franked dividend yield of 3.6 per cent. NIB shares are currently trading at $5.44, up a modest 3.4 per cent in the last 12 months. 

Here’s how you can strike it rich in the share market…

The best way to strike it rich in the share market is to buy shares that are not only cheap, but growing quickly.

Combining countless hours of research with over 30 years of hands-on stock market investing experience, The Capital Club’s founder Bruce Jackson has just published his definitive list of 3 Cheap and Good ASX Stocks for 2018.

Best of all, the report is absolutely free, exclusively for readers of The Capital Club.

In this comprehensive free report, you’ll find the name of one ASX gold stock that’s not only profitable, but trading at less than 4 times forecast profits.

You’ll also discover the name of a company one fund manager has called the cheapest stock in the ASX 100, and you’ll read about the three catalysts that could push the share price higher in the next six months.

Finally, the report names one of the cheapest retailers trading on the ASX, a company that just picked up the assets of a distressed competitor on the cheap, paying just 2 times earnings. No wonder one top fund manager thinks its share price could at least double.

With the share prices of each of these 3 companies having the potential to double or more, you’ll want to act now. Simply click here or the button below, enter your email address, and this free report will be instantly sent to you.

See the 3 stocks

Contributors to this article may own shares in some of the companies mentioned in this article. The Capital Club has a thorough disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
Avatar
Bruce Jackson has 30 years of hands on investing experience. He is passionate about stock market investing, running his own portfolio and SMSF. His focus is on small cap growth stocks. You can contact Bruce at brucej@thecapitalclub.com.au