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It looks like Utah Medical Products, Inc. (NASDAQ:UTMD) is about to go ex-dividend in the next 4 days. This means that investors who purchase shares on or after the 16th of March will not receive the dividend, which will be paid on the 2nd of April.
Utah Medical Products's next dividend payment will be US$0.28 per share, on the back of last year when the company paid a total of US$1.12 to shareholders. Calculating the last year's worth of payments shows that Utah Medical Products has a trailing yield of 1.2% on the current share price of $91.2. We love seeing companies pay a dividend, but it's also important to be sure that laying the golden eggs isn't going to kill our golden goose! As a result, readers should always check whether Utah Medical Products has been able to grow its dividends, or if the dividend might be cut.
Dividends are usually paid out of company profits, so if a company pays out more than it earned then its dividend is usually at greater risk of being cut. Utah Medical Products paid out a comfortable 38% of its profit last year.
Have Earnings And Dividends Been Growing?
Companies that aren't growing their earnings can still be valuable, but it is even more important to assess the sustainability of the dividend if it looks like the company will struggle to grow. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. That explains why we're not overly excited about Utah Medical Products's flat earnings over the past five years. Better than seeing them fall off a cliff, for sure, but the best dividend stocks grow their earnings meaningfully over the long run.
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 an average of 1.8% per year annual increase in its dividend, based on the past 10 years of dividend payments.
To Sum It Up
Is Utah Medical Products worth buying for its dividend? Utah Medical Products's earnings per share have not grown at all in recent years, although we like that it is paying out a low percentage of its earnings. In summary, Utah Medical Products appears to have some promise as a dividend stock, and we'd suggest taking a closer look at it.
Want to learn more about Utah Medical Products? Here's a visualisation of its historical rate of revenue and earnings growth.
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.
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. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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