The Cigna Group's Dividend Analysis
Assessing The Cigna Group's Upcoming Dividend and Its Financial Health
The Cigna Group (NYSE:CI) recently announced a dividend of $1.4 per share, payable on 2024-03-21, with the ex-dividend date set for 2024-03-05. 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 The Cigna Group's dividend performance and assess its sustainability.
What Does The Cigna Group Do?
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Cigna primarily provides pharmacy benefit management and health insurance services. Its PBM services, which were greatly expanded by its 2018 merger with Express Scripts, are mostly sold to health insurance plans and employers. Its largest PBM contract is the Department of Defense and it recently won a deal with top-tier insurer Centene. In health insurance and other benefits, Cigna mostly serves employers through self-funding arrangements, but it also operates in government programs, such as Medicare Advantage. The company operates mostly in the U.S. with 18 million U.S. medical members covered as of the end of June 2023.
A Glimpse at The Cigna Group's Dividend History
The Cigna Group has maintained a consistent dividend payment record since 1985. Dividends are currently distributed on a quarterly basis.
The Cigna Group has increased its dividend each year since 2005. 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 19 years. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down The Cigna Group's Dividend Yield and Growth
As of today, The Cigna Group currently has a 12-month trailing dividend yield of 1.48% and a 12-month forward dividend yield of 1.68%. This suggests an expectation of increased dividend payments over the next 12 months.
Over the past three years, The Cigna Group's annual dividend growth rate was 382.00%. Extended to a five-year horizon, this rate decreased to 191.20% per year. And over the past decade, The Cigna Group's annual dividends per share growth rate stands at an impressive 46.50%.
Based on The Cigna Group's dividend yield and five-year growth rate, the 5-year yield on cost of The Cigna Group stock as of today is approximately 309.90%.
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, The Cigna Group's dividend payout ratio is 0.21.
The Cigna Group's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks The Cigna Group's profitability 7 out of 10 as of 2023-09-30, suggesting good profitability prospects. 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. The Cigna Group's growth rank of 7 out of 10 suggests that the company's growth trajectory is good relative to its competitors.
Revenue is the lifeblood of any company, and The Cigna Group's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. The Cigna Group's revenue has increased by approximately 12.40% per year on average, a rate that underperforms than approximately 57.89% 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, The Cigna Group's earnings increased by approximately 10.90% per year on average, a rate that underperforms than approximately 44.44% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of 15.90%, which underperforms than approximately 28.57% of global competitors.
Next Steps
With a robust dividend history, a promising yield on cost, and a commitment to increasing payouts, The Cigna Group presents itself as a potentially attractive option for dividend-seeking investors. The company's sound payout ratio and solid profitability rank indicate a sustainable dividend policy, while the growth metrics, despite some underperformance compared to peers, show a company with a steady financial base capable of supporting future dividends. Investors considering The Cigna Group should weigh these strengths against the broader industry trends and the company's strategic position within the competitive landscape of healthcare services. As you contemplate the potential for long-term income from The Cigna Group, 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.
