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FBL Financial Group, Inc. (NYSE:FFG) is about to trade ex-dividend in the next 4 days. You will need to purchase shares before the 13th of March to receive the dividend, which will be paid on the 31st of March.
FBL Financial Group's next dividend payment will be US$2.00 per share, and in the last 12 months, the company paid a total of US$3.42 per share. Based on the last year's worth of payments, FBL Financial Group has a trailing yield of 7.8% on the current stock price of $44.8. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. So we need to investigate whether FBL Financial Group can afford its dividend, and if the dividend could grow.
Dividends are typically paid out of company income, so if a company pays out more than it earned, its dividend is usually at a higher risk of being cut. That's why it's good to see FBL Financial Group paying out a modest 38% of its earnings.
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?
Companies with consistently growing earnings per share generally make the best dividend stocks, as they usually find it easier to grow dividends per share. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. With that in mind, we're encouraged by the steady growth at FBL Financial Group, with earnings per share up 2.9% on average over the last five years.
Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. FBL Financial Group has delivered 30% dividend growth per year on average over the past ten years. It's encouraging to see the company lifting dividends while earnings are growing, suggesting at least some corporate interest in rewarding shareholders.
Should investors buy FBL Financial Group for the upcoming dividend? It has been growing its earnings per share somewhat in recent years, although it reinvests more than half its earnings in the business, which could suggest there are some growth projects that have not yet reached fruition. We think this is a pretty attractive combination, and would be interested in investigating FBL Financial Group more closely.
In light of that, while FBL Financial Group has an appealing dividend, it's worth knowing the risks involved with this stock. We've identified 3 warning signs with FBL Financial Group (at least 1 which is a bit unpleasant), and understanding these should be part of your investment process.
If you're in the market for dividend stocks, we recommend checking our list of top dividend stocks with a greater than 2% yield and an upcoming dividend.
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.
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