Yahoo Finance Hartford Financial Services Group (NYSE:HIG) Could Be A Buy For Its Upcoming Dividend
The Hartford Financial Services Group, Inc. (NYSE:HIG) is about to trade ex-dividend in the next 4 days. The ex-dividend date is one business day before a company's record date, which is the date on which the company determines which shareholders are entitled to receive a dividend. It is important to be aware of the ex-dividend date because any trade on the stock needs to have been settled on or before the record date. Meaning, you will need to purchase Hartford Financial Services Group's shares before the 30th of November to receive the dividend, which will be paid on the 4th of January.
The company's next dividend payment will be US$0.39 per share. Last year, in total, the company distributed US$1.54 to shareholders. Last year's total dividend payments show that Hartford Financial Services Group has a trailing yield of 2.2% on the current share price of $71.52. If you buy this business for its dividend, you should have an idea of whether Hartford Financial Services Group's dividend is reliable and sustainable. So we need to check whether the dividend payments are covered, and if earnings are growing.
View our latest analysis for Hartford Financial Services Group
If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Hartford Financial Services Group paid out just 23% of its profit last year, which we think is conservatively low and leaves plenty of margin for unexpected circumstances.
Generally speaking, the lower a company's payout ratios, the more resilient its dividend usually is.
Click here to see the company's payout ratio, plus analyst estimates of its future dividends.
Have Earnings And Dividends Been Growing?
Businesses with strong growth prospects usually make the best dividend payers, because it's easier to grow dividends when earnings per share are improving. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. For this reason, we're glad to see Hartford Financial Services Group's earnings per share have risen 17% per annum over the last five years.
The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. In the last 10 years, Hartford Financial Services Group has lifted its dividend by approximately 14% a year on average. Both per-share earnings and dividends have both been growing rapidly in recent times, which is great to see.
Final Takeaway
From a dividend perspective, should investors buy or avoid Hartford Financial Services Group? Companies like Hartford Financial Services Group that are growing rapidly and paying out a low fraction of earnings, are usually reinvesting heavily in their business. This strategy can add significant value to shareholders over the long term - as long as it's done without issuing too many new shares. We think this is a pretty attractive combination, and would be interested in investigating Hartford Financial Services Group more closely.
In light of that, while Hartford Financial Services Group has an appealing dividend, it's worth knowing the risks involved with this stock. Our analysis shows 1 warning sign for Hartford Financial Services Group and you should be aware of it before buying any shares.
If you're in the market for dividend stocks, we recommend checking our list of top dividend stocks with a greater than 2% yield and an upcoming dividend.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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