Utah Medical Products' (NASDAQ:UTMD) Dividend Will Be $0.30

Utah Medical Products, Inc. (NASDAQ:UTMD) will pay a dividend of $0.30 on the 3rd of January. This means the dividend yield will be fairly typical at 1.5%.

Check out our latest analysis for Utah Medical Products

Utah Medical Products' Payment Has Solid Earnings Coverage

Unless the payments are sustainable, the dividend yield doesn't mean too much. However, prior to this announcement, Utah Medical Products' dividend was comfortably covered by both cash flow and earnings. 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 6.6% over the next year if the trend from the last few years continues. Assuming the dividend continues along recent trends, we think the payout ratio could be 24% by next year, which is in a pretty sustainable range.

Utah Medical Products Has A Solid Track Record

The company has a sustained record of paying dividends with very little fluctuation. The dividend has gone from an annual total of $0.98 in 2013 to the most recent total annual payment of $1.20. This implies that the company grew its distributions at a yearly rate of about 2.0% 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 Has Growth Potential

The company's investors will be pleased to have been receiving dividend income for some time. Utah Medical Products has impressed us by growing EPS at 6.6% per year over the past five years. Utah Medical Products definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

Utah Medical Products Looks Like A Great Dividend Stock

In summary, it is good to see that the dividend is staying consistent, and we don't think there is any reason to suspect this might change over the medium term. The company is easily earning enough to cover its dividend payments and it is great to see that these earnings are being translated into cash flow. All of these factors considered, we think this has solid potential as a dividend stock.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. Now, if you want to look closer, it would be worth checking out our free research on Utah Medical Products management tenure, salary, and performance. Is Utah Medical Products not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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