The Challenges Facing the ASX Healthcare Sector
The ASX healthcare share sector is currently experiencing a difficult period, with many companies facing challenges due to increased competition and other market pressures. Two notable examples are CSL Ltd (ASX: CSL) and Cochlear Ltd (ASX: COH), both of which have seen significant declines in their share prices. However, amidst these challenges, there may be opportunities for investors seeking reliable dividend income.
One company that stands out in this sector is Medibank Private Ltd (ASX: MPL). While it may not be the most popular choice among blue-chip ASX dividend shares, Medibank offers a combination of a strong dividend yield and consistent dividend growth, making it an attractive option for those focused on passive income.
Strong Dividend Yield
Medibank is forecasted to deliver a larger dividend in the 2026 financial year, with a projected annual payment of 19.9 cents per share. At the time of writing, this translates into a potential forward grossed-up dividend yield of 6.2%, including franking credits. Excluding franking credits, the dividend yield would be around 4.3%.
This level of potential income is quite appealing, especially when compared to traditional fixed-income investments like term deposits. For investors looking for regular income, Medibank’s dividend yield could be a compelling factor.
Consistent Dividend Growth
Since Medibank began paying dividends per share in 2015, it has consistently increased its payout each year. There has only been one year—2020—when the company did not increase its annual dividend per share. This track record of regular dividend growth is impressive and highlights the company’s ability to maintain and grow its earnings over time.
While dividend growth is not guaranteed, Medibank has demonstrated a strong ability to boost its earnings while also increasing its dividend payouts. This consistency can provide investors with confidence in the company’s long-term financial health.
Is Medibank a Buy?
According to CMC Invest, out of seven ratings on Medibank, only two are rated as a “buy,” while the rest are “holds.” However, the average price target of $5.11 suggests a potential rise of around 10% over the next 12 months. When combined with the potential dividends, this could make Medibank an attractive investment opportunity.
In a recent business update, Medibank highlighted that APRA’s quarterly private health insurance statistics showed industry growth of 2.1% in the 12 months to 31 December 2025. This growth is a positive sign for policyholder expansion. Medibank itself reported 1.1% growth in the nine months to March 2026.
The company noted that increasing participation among younger cohorts continues to support affordability and long-term industry sustainability, even in the face of rising competition. Additionally, Medibank’s defensive earnings are a key strength, as policyholders tend to prioritise private health insurance during economic downturns.
Additional Growth Drivers
Non-resident growth in student and worker segments saw growth in the FY26 third-quarter, reflecting improved lifecycle management and a greater focus on direct and digital consumer wins. Furthermore, the Medibank Health business has shown strong growth, with operating profit increasing by 30% in the third quarter of FY26 compared to the same period in FY25.
Final Thoughts
Overall, Medibank Private Ltd appears to be a solid choice for investors seeking passive income through dividends. While it may not be the only option available, its combination of a strong dividend yield and consistent growth makes it worth considering. However, as with any investment, it is important to conduct thorough research and consider individual financial goals before making a decision.
