The board of Utah Medical Products, Inc. (NASDAQ:UTMD) has announced that it will pay a dividend of $0.305 per share on the 2nd of October. The dividend yield will be 2.2% based on this payment which is still above the industry average.

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Utah Medical Products' Projected Earnings Seem Likely To Cover Future Distributions

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 2.9% if recent trends continue. If the dividend continues along recent trends, we estimate the payout ratio will be 31%, which is in the range that makes us comfortable with the sustainability of the dividend.

View our latest analysis for Utah Medical Products

Utah Medical Products Has A Solid Track Record

Even over a long history of paying dividends, the company's distributions have been remarkably stable. Since 2015, the dividend has gone from $1.02 total annually to $1.22. This works out to be a compound annual growth rate (CAGR) of approximately 1.8% a year over that time. While the consistency in the dividend payments is impressive, we think the relatively slow rate of growth is less attractive.

Dividend Growth May Be Hard To Achieve

Investors could be attracted to the stock based on the quality of its payment history. Earnings have grown at around 2.9% a year for the past five years, which isn't massive but still better than seeing them shrink. While growth may be thin on the ground, Utah Medical Products could always pay out a higher proportion of earnings to increase shareholder returns.

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. Earnings are easily covering distributions, and the company is generating plenty of cash. All of these factors considered, we think this has solid potential as a dividend stock.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. However, there are other things to consider for investors when analysing stock performance. Are management backing themselves to deliver performance? Check their shareholdings in Utah Medical Products in our latest insider ownership analysis. 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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