American Financial Group Inc's Dividend Analysis
An in-depth look into the dividend performance and sustainability of American Financial Group Inc
American Financial Group Inc (NYSE:AFG) recently announced a dividend of $0.71 per share, payable on 2023-10-25, with the ex-dividend date set for 2023-10-12. 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 delve into American Financial Group Inc's dividend performance and assess its sustainability.
What Does American Financial Group Inc Do?
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Primarily engaged in property and casualty insurance services, American Financial Group Inc is a holding company with a focus on specialized commercial products for businesses. It also conducts annuity operations, focusing on sales of traditional fixed and fixed-indexed annuities in the education, bank, and individual markets. The company's insurance operations are conducted through the Great American Insurance Group, which writes business in all 50 of the United States, primarily through independent agents and brokers.
A Glimpse at American Financial Group Inc's Dividend History
Since 1988, American Financial Group Inc has maintained a consistent dividend payment record, with dividends currently distributed on a quarterly basis. The company has increased its dividend each year since 2002, earning it the status of a dividend achiever, a distinction given to companies that have increased their dividend each year for at least the past 21 years.
Breaking Down American Financial Group Inc's Dividend Yield and Growth
As of today, American Financial Group Inc currently has a 12-month trailing dividend yield of 2.26% and a 12-month forward dividend yield of 2.52%. This suggests an expectation of increased dividend payments over the next 12 months.
Over the past three years, American Financial Group Inc's annual dividend growth rate was 11.90%. Extended to a five-year horizon, this rate increased to 12.40% per year. Over the past decade, the company's annual dividends per share growth rate stands at an impressive 12.40%.
Based on American Financial Group Inc's dividend yield and five-year growth rate, the 5-year yield on cost of American Financial Group Inc stock as of today is approximately 4.05%.
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 2023-06-30, American Financial Group Inc's dividend payout ratio is 0.25.
American Financial Group Inc's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks American Financial Group Inc's profitability 6 out of 10 as of 2023-06-30, suggesting fair profitability. 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. American Financial Group Inc's growth rank of 6 out of 10 suggests that the company has a fair growth outlook.
Revenue is the lifeblood of any company, and American Financial Group Inc's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. American Financial Group Inc's revenue has increased by approximately 5.70% per year on average, a rate that outperforms approximately 54.27% 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, American Financial Group Inc's earnings increased by approximately 22.70% per year on average, a rate that outperforms approximately 78.75% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of 16.40%, outperforms approximately 79.17% of global competitors.
Next Steps
In conclusion, American Financial Group Inc's consistent dividend payments, impressive growth rate, low payout ratio, fair profitability, and robust growth metrics make it an attractive investment for those seeking steady dividend income. However, investors should continue to monitor these factors to ensure the sustainability of the dividends in the long run. GuruFocus Premium users can screen for high-dividend yield stocks using the High Dividend Yield Screener.
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.
This article first appeared on GuruFocus.
