An In-depth Look at Primerica Inc's Dividend Sustainability and Growth
Primerica Inc (NYSE:PRI) recently announced a dividend of $0.75 per share, payable on 2024-03-12, with the ex-dividend date set for 2024-02-20. As investors look forward to this upcoming payment, the spotlight also shines on the company's dividend history, yield, and growth rates. Using the data from GuruFocus, let's look into Primerica Inc's dividend performance and assess its sustainability.
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Primerica Inc is a provider of financial services to middle-income households in the United States and Canada. The company offers life insurance, mutual funds, annuities, and other financial products, distributed primarily on behalf of third parties. Primerica has three main subsidiaries: Primerica Financial Services, a marketing company; Primerica Life Insurance Company, a principal life insurance underwriting entity; and PFS Investments, which offers investment and savings products, brokerage services, and registered investment advisory. It has four segments: Term Life Insurance; Investment and Savings Products; Senior Health; and Corporate and Other Distributed Products. Geographically, it derives a majority of its revenue from the US.
Primerica Inc's Dividend Analysis
A Glimpse at Primerica Inc's Dividend History
Primerica Inc has maintained a consistent dividend payment record since 2010. Dividends are currently distributed on a quarterly basis. Primerica Inc has increased its dividend each year since 2010. The stock is thus listed as a dividend achiever, an honor that is given to companies that have increased their dividend each year for at least the past 14 years. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Primerica Inc's Dividend Yield and Growth
As of today, Primerica Inc currently has a 12-month trailing dividend yield of 1.05% and a 12-month forward dividend yield of 1.22%. This suggests an expectation of increased dividend payments over the next 12 months.
Over the past three years, Primerica Inc's annual dividend growth rate was 17.40%. Extended to a five-year horizon, this rate increased to 23.00% per year. And over the past decade, Primerica Inc's annual dividends per share growth rate stands at an impressive 22.50%. Based on Primerica Inc's dividend yield and five-year growth rate, the 5-year yield on cost of Primerica Inc stock as of today is approximately 2.96%.
Primerica Inc's Dividend Analysis
The Sustainability Question: Payout Ratio and Profitability
To assess the sustainability of the dividend, one needs to evaluate the company's payout ratio. The dividend payout ratio provides insights into the portion of earnings the company distributes as dividends. A lower ratio suggests that the company retains a significant part of its earnings, thereby ensuring the availability of funds for future growth and unexpected downturns. As of 2023-12-31, Primerica Inc's dividend payout ratio is 0.16.
Primerica Inc's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Primerica Inc's profitability 8 out of 10 as of 2023-12-31, suggesting good profitability prospects. The company has reported positive net income for each year over the past decade, further solidifying its high profitability.
Growth Metrics: The Future Outlook
To ensure the sustainability of dividends, a company must have robust growth metrics. Primerica Inc's growth rank of 8 out of 10 suggests that the company's growth trajectory is good relative to its competitors.
Revenue is the lifeblood of any company, and Primerica Inc's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Primerica Inc's revenue has increased by approximately 13.70% per year on average, a rate that outperforms approximately 80.31% of global competitors.
The company's 3-year EPS growth rate showcases its capability to grow its earnings, a critical component for sustaining dividends in the long run. During the past three years, Primerica Inc's earnings increased by approximately 8.20% per year on average, a rate that outperforms approximately 60.16% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of 9.30%, which outperforms approximately 62.33% of global competitors.
Next Steps
In conclusion, Primerica Inc's track record of consistent dividend payments, coupled with its strong dividend growth rate, signals a robust dividend policy. The company's low payout ratio and high profitability rank suggest that the dividends are well-covered by earnings, providing a layer of safety for investors. Furthermore, Primerica Inc's solid growth metrics indicate a promising future, which could potentially lead to continued dividend increases. These factors make Primerica Inc an attractive option for value investors seeking steady income streams with the potential for growth. Will Primerica Inc continue its streak of dividend hikes, and how might future financial performance influence its dividend strategy? These are questions value investors may ponder as they consider adding PRI to their portfolios.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
