U.S. Markets closed

What Makes Allianz SE (ETR:ALV) A Great Dividend Stock?

Simply Wall St

Allianz SE (ETR:ALV) is a true Dividend Rock Star. Its yield of 4.2% makes it one of the market's top dividend payer. In the past ten years, Allianz has also grown its dividend from €3.5 to €9. Below, I have outlined more attractive dividend aspects for Allianz for income investors who may be interested in new dividend stocks for their portfolio.

Check out our latest analysis for Allianz

What Is A Dividend Rock Star?

It is a stock that pays a consistent, reliable and competitive dividend over a long period of time, and is expected to continue to pay in the same manner many years to come. More specifically:

  • Its annual yield is among the top 25% of dividend payers
  • It has paid dividend every year without dramatically reducing payout in the past
  • Its has increased its dividend per share amount over the past
  • It can afford to pay the current rate of dividends from its earnings
  • It is able to continue to payout at the current rate in the future

High Yield And Dependable

Allianz's yield sits at 4.2%, which is high for Insurance stocks. But the real reason Allianz stands out is because it has a high chance of being able to continue to pay dividend at this level for years to come, something that is quite desirable if you are looking to create a portfolio that generates a steady stream of income.

XTRA:ALV Historical Dividend Yield, September 14th 2019

If dividend is a key criteria in your investment consideration, then you need to make sure the dividend stock you're eyeing out is reliable in its payments. ALV has increased its DPS from €3.5 to €9 in the past 10 years. It has also been paying out dividend consistently during this time, as you'd expect for a company increasing its dividend levels. These are all positive signs of a great, reliable dividend stock.

Allianz has a trailing twelve-month payout ratio of 49%, which means that the dividend is covered by earnings. Going forward, analysts expect ALV's payout to remain around the same level at 50% of its earnings. Assuming a constant share price, this equates to a dividend yield of 4.8%. Furthermore, EPS should increase to €19.48.

When thinking about whether a dividend is sustainable, another factor to consider is the cash flow. Cash flow is important because companies with strong cash flow can usually sustain higher payout ratios.

Next Steps:

Allianz's strong dividend attributes make it, without a doubt, a stock dividend investors should be considering for their portfolios. However, given this is purely a dividend analysis, I recommend taking sufficient time to understand its core business and determine whether the company and its investment properties suit your overall goals. Below, I've compiled three fundamental aspects you should further examine:

  1. Future Outlook: What are well-informed industry analysts predicting for ALV’s future growth? Take a look at our free research report of analyst consensus for ALV’s outlook.
  2. Valuation: What is ALV 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 ALV is currently mispriced by the market.
  3. Other Dividend Rockstars: Are there strong dividend payers with better fundamentals out there? Check out our free list of these great stocks here.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.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.