FBL Financial Group, Inc. (NYSE:FFG) stock is about to trade ex-dividend in 3 days time. Ex-dividend means that investors that purchase the stock on or after the 13th of September will not receive this dividend, which will be paid on the 30th of September.
FBL Financial Group's next dividend payment will be US$0.48 per share, on the back of last year when the company paid a total of US$3.42 to shareholders. Looking at the last 12 months of distributions, FBL Financial Group has a trailing yield of approximately 6.2% on its current stock price of $54.9. If you buy this business for its dividend, you should have an idea of whether FBL Financial Group's dividend is reliable and sustainable. That's why we should always check whether the dividend payments appear sustainable, and if the company is growing.
Dividends are typically paid from company earnings. If a company pays more in dividends than it earned in profit, then the dividend could be unsustainable. Fortunately FBL Financial Group's payout ratio is modest, at just 45% of profit.
When a company paid out less in dividends than it earned in profit, this generally suggests its dividend is affordable. The lower the % of its profit that it pays out, the greater the margin of safety for the dividend if the business enters a downturn.
Have Earnings And Dividends Been Growing?
Stocks with flat earnings can still be attractive dividend payers, but it is important to be more conservative with your approach and demand a greater margin for safety when it comes to dividend sustainability. If earnings fall far enough, the company could be forced to cut its dividend. That explains why we're not overly excited about FBL Financial Group's flat earnings over the past five years. It's better than seeing them drop, certainly, but over the long term, all of the best dividend stocks are able to meaningfully grow their earnings per share.
The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. FBL Financial Group has delivered an average of 21% per year annual increase in its dividend, based on the past 10 years of dividend payments.
To Sum It Up
Is FBL Financial Group an attractive dividend stock, or better left on the shelf? FBL Financial Group's earnings per share have not grown at all in recent years, although we like that it is paying out a low percentage of its earnings. We're unconvinced on the company's merits, and think there might be better opportunities out there.
Want to learn more about FBL Financial Group? Here's a visualisation of its historical rate of revenue and earnings growth.
We wouldn't recommend just buying the first dividend stock you see, though. Here's a list of interesting dividend stocks with a greater than 2% yield and an upcoming dividend.
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If you spot an error that warrants correction, please contact the editor at email@example.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.