American Financial Group Inc's Dividend Analysis
Understanding the Dividend Dynamics of American Financial Group Inc
American Financial Group Inc(NYSE:AFG) recently announced a dividend of $0.71 per share, payable on 2024-01-25, with the ex-dividend date set for 2024-01-11. 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 American Financial Group Inc's dividend performance and assess its sustainability.
What Does American Financial Group Inc Do?
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American Financial Group Inc is a holding company that is engaged primarily in property and casualty insurance services. The company has a focus on specialized commercial products for businesses. American also has annuity operations that are focused on sales of traditional fixed and fixed-indexed annuities in the education, bank, and individual markets. American Financial Group Inc's insurance operations are conducted through the Great American Insurance Group. The group 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
American Financial Group Inc has maintained a consistent dividend payment record since 1988. Dividends are currently distributed on a quarterly basis.
American Financial Group Inc has increased its dividend each year since 2002. 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 22 years. Below is a chart showing annual Dividends Per Share for tracking historical trends.
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 2.19% and a 12-month forward dividend yield of 2.40%. 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. And over the past decade, American Financial Group Inc'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 3.93%.
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 2023-09-30, 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 2023-09-30, suggesting fair profitability. The company has reported positive net income for each of 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 53.24% 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 30.00% per year on average, a rate that outperforms approximately 83.42% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of 11.70%, which outperforms approximately 71.03% of global competitors.
Next Steps
When considering the consistent dividend payments, robust dividend growth rate, prudent payout ratio, solid profitability, and strong growth metrics, American Financial Group Inc presents a compelling case for investors seeking stable and growing income streams. The company's financial health and strategic market position suggest that it is well-equipped to continue rewarding shareholders with dividends. As American Financial Group Inc navigates through market cycles, its ability to sustain and potentially increase its dividend payouts remains a key watchpoint for value investors.
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.
