Yahoo Finance 2 Days Left Before RSA Insurance Group plc (LON:RSA) Will Start Trading Ex-Dividend, Is It Worth Buying?
Attention dividend hunters! RSA Insurance Group plc (LON:RSA) will be distributing its dividend of UK£0.073 per share on the 12 October 2018, and will start trading ex-dividend in 2 days time on the 06 September 2018. Is this future income a persuasive enough catalyst for investors to think about RSA Insurance Group as an investment today? Below, I’m going to look at the latest data and analyze the stock and its dividend property in further detail.
Check out our latest analysis for RSA Insurance Group
How I analyze a dividend stock
When researching a dividend stock, I always follow the following screening criteria:
Is it the top 25% annual dividend yield payer?
Has its dividend been stable over the past (i.e. no missed payments or significant payout cuts)?
Has dividend per share amount increased over the past?
Is its earnings sufficient to payout dividend at the current rate?
Based on future earnings growth, will it be able to continue to payout dividend at the current rate?
How well does RSA Insurance Group fit our criteria?
The company currently pays out 68.4% of its earnings as a dividend, according to its trailing twelve-month data, which means that the dividend is covered by earnings. Going forward, analysts expect RSA’s payout to remain around the same level at 64.4% of its earnings, which leads to a dividend yield of 5.3%. Furthermore, EPS should increase to £0.50.
Reliablity is an important factor for dividend stocks, particularly for income investors who want a strong track record of payment and a positive outlook for future payout. Not only have dividend payouts from RSA Insurance Group fallen over the past 10 years, it has also been highly volatile during this time, with drops of over 25% in some years. These characteristics do not bode well for income investors seeking reliable stream of dividends.
Relative to peers, RSA Insurance Group has a yield of 3.1%, which is on the low-side for Insurance stocks.
Next Steps:
Whilst there are few things you may like about RSA Insurance Group from a dividend stock perspective, the truth is that overall it probably is not the best choice for a dividend investor. However, if you are not strictly just a dividend investor, the stock could still offer some interesting investment opportunities. 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. I’ve put together three fundamental factors you should look at:
Future Outlook: What are well-informed industry analysts predicting for RSA’s future growth? Take a look at our free research report of analyst consensus for RSA’s outlook.
Valuation: What is RSA 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 RSA is currently mispriced by the market.
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 past 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. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.
