Insurance Australia Group Limited (ASX:IAG) has pleased shareholders over the past 10 years, paying out an average dividend of 5.00% annually. The stock currently pays out a dividend yield of 5.53%, and has a market cap of A$16.93B. Let’s dig deeper into whether Insurance Australia Group should have a place in your portfolio. Check out our latest analysis for Insurance Australia Group
How I analyze a dividend stock
Whenever I am looking at a potential dividend stock investment, I always check these five metrics:
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Does it pay an annual yield higher than 75% of dividend payers?
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Has it consistently paid a stable dividend without missing a payment or drastically cutting payout?
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Has dividend per share amount increased over the past?
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Does earnings amply cover its dividend payments?
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Will it be able to continue to payout at the current rate in the future?
Does Insurance Australia Group pass our checks?
The current trailing twelve-month payout ratio for the stock is 84.54%, meaning the dividend is sufficiently covered by earnings. In the near future, analysts are predicting a payout ratio of 79.98%, leading to a dividend yield of 4.48%. Furthermore, EPS is forecasted to fall to A$0.37 in the upcoming year. If there’s one type of stock you want to be reliable, it’s dividend stocks and their stable income-generating ability. Although IAG’s per share payments have increased in the past 10 years, it has not been a completely smooth ride. Investors have seen reductions in the dividend per share in the past, although, it has picked up again. In terms of its peers, Insurance Australia Group produces a yield of 5.53%, which is high for Insurance stocks.
Next Steps:
With these dividend metrics in mind, I definitely rank Insurance Australia Group as a strong income stock, and is worth further research for anyone who considers dividends an important part of their portfolio strategy. Given that this is purely a dividend analysis, I recommend taking sufficient time to understand its core business and determine whether the company and its investment properties suit your overall goals. Below, I’ve compiled three important factors you should look at:
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1. Future Outlook: What are well-informed industry analysts predicting for IAG’s future growth? Take a look at our free research report of analyst consensus for IAG’s outlook.
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2. Valuation: What is IAG worth today? Even if the stock is a cash cow, it’s not worth an infinite price. The intrinsic value infographic in our free research report helps visualize whether IAG is currently mispriced by the market.
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3. Other Dividend Rockstars: Are there better dividend payers with stronger fundamentals out there? Check out our free list of these great stocks here.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.