CNA Financial Corp's Dividend Analysis
Assessing the Sustainability of CNA Financial Corp's Upcoming Dividend
CNA Financial Corp (NYSE:CNA) recently announced a dividend of $2 per share, payable on 2024-03-07, with the ex-dividend date set for 2024-02-16. 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 CNA Financial Corp's dividend performance and assess its sustainability.
What Does CNA Financial Corp Do?
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CNA Financial Corporation (NYSE:CNA) is an insurance holding company that provides commercial property and casualty insurance. The company operates under five segments: Specialty, Commercial and International being its core business and two segments for its non-core businesses, which are Life and Group and Corporate and Other. CNA, through its segments, provides professional, financial, specialty property and casualty products to small businesses and medium scale organizations. It has its business spread across Continental Europe, the United Kingdom, and Canada. The majority of the revenues are generated from the Specialty and Commercial segment of the business.
A Glimpse at CNA Financial Corp's Dividend History
CNA Financial Corp has maintained a consistent dividend payment record since 2011. Dividends are currently distributed on a quarterly basis. CNA Financial Corp has increased its dividend each year since 2011, earning the title of a dividend achiever, which is reserved for companies that have consistently increased their dividend each year for at least the past 13 years. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down CNA Financial Corp's Dividend Yield and Growth
As of today, CNA Financial Corp currently has a 12-month trailing dividend yield of 3.63% and a 12-month forward dividend yield of 3.80%. This suggests an expectation of an increase in dividend payments over the next 12 months. Over the past three years, CNA Financial Corp's annual dividend growth rate was 4.30%, which increased to 5.00% per year over a five-year horizon. Over the past decade, CNA Financial Corp's annual dividends per share growth rate stands at 7.40%. Based on CNA Financial Corp's dividend yield and five-year growth rate, the 5-year yield on cost of CNA Financial Corp stock as of today is approximately 4.63%.
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 2023-12-31, CNA Financial Corp's dividend payout ratio is 0.38. CNA Financial Corp's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks CNA Financial Corp's profitability 6 out of 10 as of 2023-12-31, 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. CNA Financial Corp'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 CNA Financial Corp's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. CNA Financial Corp's revenue has increased by approximately 7.10% per year on average, a rate that outperforms approximately 58.85% 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, CNA Financial Corp's earnings increased by approximately 23.00% per year on average, a rate that outperforms approximately 77.81% of global competitors. Lastly, the company's 5-year EBITDA growth rate of 4.90%, which outperforms approximately 47.26% of global competitors.
Next Steps
In conclusion, CNA Financial Corp's consistent track record of increasing dividends, combined with a reasonable payout ratio and fair profitability, positions it as a potentially attractive option for value investors interested in stable dividend income. The company's solid growth metrics further reinforce the likelihood of ongoing dividend sustainability. However, investors should always consider the broader economic context and the company's strategic positioning within its industry when evaluating the long-term prospects of any dividend-paying stock. For those looking to expand their portfolio with dividend-yielding investments, 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.
