Radian Group Inc's Dividend Analysis
Unveiling the Dividend Dynamics of Radian Group Inc (NYSE:RDN)
Radian Group Inc (NYSE:RDN) recently announced a dividend of $0.23 per share, payable on 2023-12-12, with the ex-dividend date set for 2023-11-24. 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 Radian Group Inc's dividend performance and assess its sustainability.
What Does Radian Group Inc Do?
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Radian Group Inc provides mortgage insurance and services to the real estate and mortgage finance industries. Radian's mortgage insurance provides coverage to lending institutions throughout the United States. Its services include analytics and consulting for buyers and sellers of, and investors in, mortgage- and real estate-related loans and securities and other asset-backed securities. Insurance premiums account for more than three fourths of the company's revenue. Services revenue and investment income are the other principal sources of revenue. It operates in two segments: Mortgage and homegenius. The Mortgage segment earns the majority of revenue.
A Glimpse at Radian Group Inc's Dividend History
Radian Group Inc has maintained a consistent dividend payment record since 1993. Dividends are currently distributed on a quarterly basis. Radian Group Inc has increased its dividend each year since 2009. 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 14 years. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Radian Group Inc's Dividend Yield and Growth
As of today, Radian Group Inc currently has a 12-month trailing dividend yield of 3.45% and a 12-month forward dividend yield of 3.55%. This suggests an expectation of increased dividend payments over the next 12 months.
Over the past three years, Radian Group Inc's annual dividend growth rate was 330.90%. Extended to a five-year horizon, this rate decreased to 194.60% per year. And over the past decade, Radian Group Inc's annual dividends per share growth rate stands at an impressive 57.00%.
Based on Radian Group Inc's dividend yield and five-year growth rate, the 5-year yield on cost of Radian Group Inc stock as of today is approximately 765.57%.
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, Radian Group Inc's dividend payout ratio is 0.23.
Radian Group Inc's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Radian Group Inc's profitability 7 out of 10 as of 2023-09-30, suggesting good profitability prospects. The company has reported net profit in 9 years out of the past 10 years.
Growth Metrics: The Future Outlook
To ensure the sustainability of dividends, a company must have robust growth metrics. Radian Group Inc'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 Radian Group Inc's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Radian Group Inc's revenue has increased by approximately -1.30% per year on average, a rate that underperforms than approximately 68.94% 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, Radian Group Inc's earnings increased by approximately 14.90% per year on average, a rate that underperforms than approximately 28.8% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of 14.60%, which underperforms than approximately 22.71% of global competitors.
Concluding Insights on Radian Group Inc's Dividend Profile
With a history of consistent dividend payments and a significant growth in dividend rates over the past decade, Radian Group Inc stands as a potentially attractive option for value investors focused on income generation. The company's moderate payout ratio and solid profitability rank suggest that its dividend payments are sustainable in the near term. However, investors should also consider the mixed signals from the company's growth metrics, which indicate some areas of underperformance relative to global competitors. As the real estate and mortgage finance industries evolve, Radian Group Inc's ability to adapt and maintain its dividend attractiveness will be crucial. Value investors may find it beneficial to monitor the company's performance closely, considering both its historical dividend achievements and future growth potential.
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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.
