Read This Before Buying Principal Financial Group Inc (NASDAQ:PFG) For Its Upcoming US$0.53 Dividend
Investors who want to cash in on Principal Financial Group Inc’s (NASDAQ:PFG) upcoming dividend of US$0.53 per share have only 2 days left to buy the shares before its ex-dividend date, 05 September 2018, in time for dividends payable on the 28 September 2018. What does this mean for current shareholders and potential investors? Below, I will explain how holding Principal Financial Group can impact your portfolio income stream, by analysing the stock’s most recent financial data and dividend attributes.
See our latest analysis for Principal Financial Group
What Is A Dividend Rock Star?
It is a stock that pays a reliable and steady dividend over the past decade, at a rate that is competitive relative to the other dividend-paying companies on the market. More specifically:
It is paying an annual yield above 75% of dividend payers
It consistently pays out dividend without missing a payment or significantly cutting payout
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 has the ability to keep paying its dividends going forward
High Yield And Dependable
Principal Financial Group’s dividend yield stands at 3.8%, which is high for Insurance stocks. But the real reason Principal Financial Group stands out is because it has a proven track record of continuously paying out this level of dividends, from earnings, to shareholders and can be expected to continue paying in the future. This is a highly desirable trait for a stock holding if you’re investor who wants a robust cash inflow from your portfolio over a long period of time.
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. In the case of PFG it has increased its DPS from $0.90 to $2.12 in the past 10 years. During this period it has not missed a payment, as one would expect for a company increasing its dividend. These are all positive signs of a great, reliable dividend stock.
Principal Financial Group has a trailing twelve-month payout ratio of 22.9%, which means that the dividend is covered by earnings. In the near future, analysts are predicting a higher payout ratio of 38.1%, leading to a dividend yield of around 4.1%. However, EPS is forecasted to fall to $5.78 in the upcoming year. Therefore, although payout is expected to increase, the fall in earnings may not equate to higher dividend income.
Next Steps:
Principal Financial Group ticks all the boxes for what I look for in a dividend stock. If you are looking to build an income focused portfolio, this could be one to include. However, given 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. Below, I’ve compiled three fundamental factors you should further research:
Future Outlook: What are well-informed industry analysts predicting for PFG’s future growth? Take a look at our free research report of analyst consensus for PFG’s outlook.
Valuation: What is PFG 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 PFG is currently mispriced by the market.
Other Dividend Rockstars: Are there strong dividend payers with better 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 editorial-team@simplywallst.com.
