If we assume FY18 NPAT of $440m, (up 4% on FY17), and $0.12 per share in dividends, Medibank Private is now 20x FY18 earnings on a forward dividend yield of 4.3%.
Medibank continues to drive industry wide reforms, although growth appears limited due to ongoing affordability concerns.
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We recommend selling at the money covered call options into June to enhance the yield, whilst keeping exposure to the March dividend.
