American International Group Inc's Dividend Analysis
Assessing the Sustainability of AIG's Upcoming Dividend
American International Group Inc (NYSE:AIG) recently announced a dividend of $0.36 per share, payable on 2023-12-28, with the ex-dividend date set for 2023-12-13. 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 International Group Inc's dividend performance and assess its sustainability.
What Does American International Group Inc Do?
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American International Group is one of the largest insurance and financial services firms in the world and has a global footprint. It operates through a wide range of subsidiaries that provide property, casualty, and life insurance. The company recently spun off its life insurance operations (Corebridge), but still retains a majority stake.
A Glimpse at American International Group Inc's Dividend History
American International Group Inc has maintained a consistent dividend payment record since 2013. Dividends are currently distributed on a quarterly basis.
American International Group Inc has increased its dividend each year since 2013. 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 10 years. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down American International Group Inc's Dividend Yield and Growth
As of today, American International Group Inc currently has a 12-month trailing dividend yield of 2.05% and a 12-month forward dividend yield of 2.17%. This suggests an expectation of increase dividend payments over the next 12 months.
Based on American International Group Inc's dividend yield and five-year growth rate, the 5-year yield on cost of American International Group Inc stock as of today is approximately 2.05%.
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 2023-09-30, American International Group Inc's dividend payout ratio is 0.24.
American International Group Inc's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks American International Group Inc's profitability 5 out of 10 as of 2023-09-30, suggesting fair profitability. The company has reported net profit in 6 years out of past 10 years.
Growth Metrics: The Future Outlook
To ensure the sustainability of dividends, a company must have robust growth metrics. American International Group Inc's growth rank of 5 out of 10 suggests that the company has a fair growth outlook.
Revenue is the lifeblood of any company, and American International Group Inc's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. American International Group Inc's revenue has increased by approximately 8.60% per year on average, a rate that outperforms approximately 66.15% 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 International Group Inc's earnings increased by approximately -0.20% per year on average, a rate that outperforms approximately 42.93% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of 21.30%, which outperforms approximately 85.96% of global competitors.
Concluding Thoughts on AIG's Dividend Prospects
In conclusion, American International Group Inc's consistent dividend increases, reasonable payout ratio, and fair profitability and growth ranks paint a picture of a company that is committed to rewarding its shareholders while maintaining a balance with its growth strategies. While past performance is no guarantee of future results, AIG's dividend history and financial metrics suggest that its dividend payments are on a sustainable path. Investors interested in dividend stocks might consider AIG's potential for continued dividend growth, alongside its financial health and market position. As always, further due diligence is advised.
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.
