Utah Medical Products (NASDAQ:UTMD) Is Due To Pay A Dividend Of US$0.29

The board of Utah Medical Products, Inc. (NASDAQ:UTMD) has announced that it will pay a dividend on the 5th of April, with investors receiving US$0.29 per share. This means the annual payment is 3.0% of the current stock price, which is above the average for the industry.

View our latest analysis for Utah Medical Products

Utah Medical Products' Payment Has Solid Earnings Coverage

We like to see robust dividend yields, but that doesn't matter if the payment isn't sustainable. 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.

If the trend of the last few years continues, EPS will grow by 4.6% over the next 12 months. If the dividend continues on this path, the payout ratio could be 69% by next year, which we think can be pretty sustainable going forward.

Utah Medical Products Has A Solid Track Record

The company has been paying a dividend for a long time, and it has been quite stable which gives us confidence in the future dividend potential. The dividend has gone from US$0.94 in 2012 to the most recent annual payment of US$1.14. This implies that the company grew its distributions at a yearly rate of about 1.9% 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's Growth Prospects Are Limited

The company's investors will be pleased to have been receiving dividend income for some time. Earnings have grown at around 4.6% a year for the past five years, which isn't massive but still better than seeing them shrink. While EPS growth is quite low, Utah Medical Products has the option to increase the payout ratio to return more cash to shareholders.

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. 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. Taking this all into consideration, this looks like it could be a good dividend opportunity.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. As an example, we've identified 2 warning signs for Utah Medical Products that you should be aware of before investing. Looking for more high-yielding dividend ideas? Try our curated list of strong dividend payers.

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