Utah Medical Products, Inc. (NASDAQ:UTMD) is about to trade ex-dividend in the next 4 days. If you purchase the stock on or after the 12th of March, you won’t be eligible to receive this dividend, when it is paid on the 2nd of April.
Utah Medical Products’s next dividend payment will be US$0.28 per share. Last year, in total, the company distributed US$1.12 to shareholders. Last year’s total dividend payments show that Utah Medical Products has a trailing yield of 1.3% on the current share price of $86. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. We need to see whether the dividend is covered by earnings and if it’s growing.
If a company pays out more in dividends than it earned, then the dividend might become unsustainable – hardly an ideal situation. Fortunately Utah Medical Products’s payout ratio is modest, at just 28% of profit.
Have Earnings And Dividends Been Growing?
Businesses with strong growth prospects usually make the best dividend payers, because it’s easier to grow dividends when earnings per share are improving. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. With that in mind, we’re encouraged by the steady growth at Utah Medical Products, with earnings per share up 5.3% on average over the last five years.
The main way most investors will assess a company’s dividend prospects is by checking the historical rate of dividend growth. Utah Medical Products has delivered 2.0% dividend growth per year on average over the past ten years.
The Bottom Line
Is Utah Medical Products worth buying for its dividend? Utah Medical Products has seen its earnings per share grow slowly in recent years, and the company reinvests more than half of its profits in the business, which generally bodes well for its future prospects. In summary, Utah Medical Products appears to have some promise as a dividend stock, and we’d suggest taking a closer look at it.
With that in mind, a critical part of thorough stock research is being aware of any risks that stock currently faces. To help with this, we’ve discovered 2 warning signs for Utah Medical Products (1 makes us a bit uncomfortable!) that you ought to be aware of before buying the shares.
A common investment mistake is buying the first interesting stock you see. Here you can find a list of promising dividend stocks with a greater than 2% yield and an upcoming dividend.
If you spot an error that warrants correction, please contact the editor at email@example.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.
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