Important news for shareholders and potential investors in The Hartford Financial Services Group Inc (NYSE:HIG): The dividend payment of US$0.30 per share will be distributed into shareholder on 01 October 2018, and the stock will begin trading ex-dividend at an earlier date, 31 August 2018. What does this mean for current shareholders and potential investors? Below, I will explain how holding Hartford Financial Services Group can impact your portfolio income stream, by analysing the stock’s most recent financial data and dividend attributes.
5 checks you should do on a dividend stock
When researching a dividend stock, I always follow the following screening criteria:
- Is it the top 25% annual dividend yield payer?
- Has it paid dividend every year without dramatically reducing payout in the past?
- Has dividend per share amount increased over the past?
- Does earnings amply cover its dividend payments?
- Will it have the ability to keep paying its dividends going forward?
How does Hartford Financial Services Group fare?
The current trailing twelve-month payout ratio for the stock is 78.2%, which means that the dividend is covered by earnings. However, going forward, analysts expect HIG’s payout to fall to 24.8% of its earnings, which leads to a dividend yield of 2.4%. However, EPS should increase to $5.19, meaning that the lower payout ratio does not necessarily implicate a lower dividend payment.
Reliablity is an important factor for dividend stocks, particularly for income investors who want a strong track record of payment and a positive outlook for future payout. Dividend payments from Hartford Financial Services Group have been volatile in the past 10 years, with some years experiencing significant drops of over 25%. This means that dividend hunters should probably steer clear of the stock, at least for now until the track record improves.
Compared to its peers, Hartford Financial Services Group produces a yield of 2.4%, which is on the low-side for Insurance stocks.
Taking all the above into account, Hartford Financial Services Group is a complicated pick for dividend investors given that there are a couple of positive things about it as well as negative. But if you are not exclusively a dividend investor, the stock could still be an interesting investment opportunity. Given that this is purely a dividend analysis, I urge potential investors to try and get a good understanding of the underlying business and its fundamentals before deciding on an investment. I’ve put together three important aspects you should further examine:
- Future Outlook: What are well-informed industry analysts predicting for HIG’s future growth? Take a look at our free research report of analyst consensus for HIG’s outlook.
- Valuation: What is HIG worth today? Even if the stock is a cash cow, it’s not worth an infinite price. The intrinsic value infographic in our free research report helps visualize whether HIG is currently mispriced by the market.
- Dividend Rockstars: Are there better dividend payers with stronger fundamentals out there? Check out our free list of these great stocks here.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at firstname.lastname@example.org.