Yahoo Finance Read This Before Considering Reinsurance Group of America Incorporated (NYSE:RGA) For Its Upcoming US$0.60 Dividend
Important news for shareholders and potential investors in Reinsurance Group of America Incorporated (NYSE:RGA): The dividend payment of US$0.60 per share will be distributed to shareholders on 27 November 2018, and the stock will begin trading ex-dividend at an earlier date, 05 November 2018. Should you diversify into Reinsurance Group of America and boost your portfolio income stream? Well, keep on reading because today, 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 Reinsurance Group of America
How I analyze a dividend stock
When assessing a stock as a potential addition to my dividend Portfolio, I look at these five areas:
Does it pay an annual yield higher than 75% of dividend payers?
Has it consistently paid a stable dividend without missing a payment or drastically cutting payout?
Has dividend per share risen in the past couple of years?
Can it afford to pay the current rate of dividends from its earnings?
Based on future earnings growth, will it be able to continue to payout dividend at the current rate?
How does Reinsurance Group of America fare?
Reinsurance Group of America has a trailing twelve-month payout ratio of 7.4%, which means that the dividend is covered by earnings. Going forward, analysts expect RGA’s payout to increase to 19% of its earnings, which leads to a dividend yield of around 1.8%. However, EPS is forecasted to fall to $12.59 in the upcoming year. Therefore, although payout is expected to increase, the fall in earnings may not equate to higher dividend income.
When assessing the forecast sustainability of a dividend it is also worth considering the cash flow of the business. Companies with strong cash flow can sustain a higher payout ratio, while companies with weaker cash flow generally cannot.
If dividend is a key criteria in your investment consideration, then you need to make sure the dividend stock you’re eyeing out is reliable in its payments. RGA has increased its DPS from $0.36 to $2.4 in the past 10 years. It has also been paying out dividend consistently during this time, as you’d expect for a company increasing its dividend levels. These are all positive signs of a great, reliable dividend stock.
In terms of its peers, Reinsurance Group of America generates a yield of 1.8%, which is on the low-side for Insurance stocks.
Next Steps:
With this in mind, I definitely rank Reinsurance Group of America as a strong dividend stock, and makes it worth further research for anyone who likes steady income generation from their portfolio. Given that this is purely a dividend analysis, you should always research extensively before deciding whether or not a stock is an appropriate investment for you. I always recommend analysing the company’s fundamentals and underlying business before making an investment decision. Below, I’ve compiled three important factors you should further research:
Future Outlook: What are well-informed industry analysts predicting for RGA’s future growth? Take a look at our free research report of analyst consensus for RGA’s outlook.
Valuation: What is RGA 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 RGA is currently mispriced by the market.
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 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.
