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

Utah Medical Products, Inc. (NASDAQ:UTMD) has announced that it will pay a dividend of US$0.29 per share on the 6th of July. This means the annual payment is 3.4% of the current stock price, which is above the average for the industry.

See our latest analysis for Utah Medical Products

Utah Medical Products' Payment Has Solid Earnings Coverage

A big dividend yield for a few years doesn't mean much if it can't be sustained. Before making this announcement, Utah Medical Products was easily earning enough to cover the dividend. This means that most of its earnings are being retained to grow the business.

Over the next year, EPS could expand by 4.6% if recent trends continue. If the dividend continues along recent trends, we estimate the payout ratio will be 66%, which is in the range that makes us comfortable with the sustainability of the dividend.

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. Since 2012, the dividend has gone from US$0.94 to US$1.16. This implies that the company grew its distributions at a yearly rate of about 2.1% over that duration. Although we can't deny that the dividend has been remarkably stable in the past, the growth has been pretty muted.

Dividend Growth May Be Hard To Achieve

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. However, Utah Medical Products has only grown its earnings per share at 4.6% per annum over the past five years. 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

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 in all, this checks a lot of the boxes we look for when choosing an income stock.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. As an example, we've identified 1 warning sign for Utah Medical Products that you should be aware of before investing. 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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