Monday, February 27, 2012

Utah Medical UTMD Could a tiny company qualify as a dividend machine two years in a row?

Dividend Machine for week of February 27, 2012  -  Utah Medical Products - UTMD

                I like Ben Stein and respect a lot of what he has to say about investing.  He loves ETF’s particularly and I do not like any pooled investments so we differ there.  He thinks ordinary investors will suffer when they try to invest in a small company that they think will go big.  He suggests using an ETF for this kind of investing.

Therefore, he would never suggest the ordinary investor buy such a small company as UTMD as it is a micro cap. company.   Micro caps are less liquid than are larger companies.   If you want to sell it, you may not be able to find a buyer.  Micro caps rarely have option income potential unless they are in a growth area.  Utah Medical Products is not a growth company it is an income investment and that is why I am profiling it as my dividend machine for this week.

                Utah Medical Products is on my dividend machine list for 2012 just as it was in 2011.   See the original post in 2011    UTMD sells medical products for women and their babies.    America’s birth rate is slowing, but the whole population is growing and so will the need for these products.  

                One of the nice aspects about owning this little company is that in addition to producing good products for women and their babies, it shares a lot of its income with the investors.  When times are good, it has split the stock and paid out extra cash to investors.

                UTMD trades in the $30.36 range.  If you own it by March 15, 2012, you will receive the quarterly dividend of $.24 on April 4, 2012.  This represents a 3.61% yield. 

                During the past four quarters, UTMD earned $1.94 and paid out $.96.  Their routine quarterly dividend is $.24 this year but during the past four quarters, they paid out an extra dividend.   UTMD has paid dividends since 2004 and have increased the dividend every year.  Debt to equity ratio of this company is very manageable at .59. 

                If you need to diversity the portion of your portfolio that creates income, and you are not afraid of a micro cap company, consider UTMD as a dividend machine.

Very Truly Yours,

P.S.  As you know, I rarely comment on stock price.  However, it is nice to see that in the year since I profiled UTMD, the stock price has increased about 10 percent.
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