Travelers Companies Inc (TRV): A Deep Dive into its Dividend Performance
Assessing Dividend Sustainability and Growth Prospects of The Travelers Companies Inc (NYSE:TRV)
The Travelers Companies Inc (NYSE:TRV) recently announced a dividend of $1 per share, payable on 2023-09-29, with the ex-dividend date set for 2023-09-07. 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 deep dive into The Travelers Companies Inc's dividend performance and assess its sustainability.
What Does The Travelers Companies Inc Do?
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Travelers offers a broad product range and participates in both commercial and personal insurance lines. Its commercial operations offer a variety of coverage types for companies of any size but concentrate on serving midsize businesses. Its personal lines are roughly evenly split between auto and homeowners insurance. Travelers derives 6% of its premiums from foreign markets.
A Glimpse at The Travelers Companies Inc's Dividend History
The Travelers Companies Inc has maintained a consistent dividend payment record since 1985. Dividends are currently distributed on a quarterly basis.
The Travelers Companies Inc has increased its dividend each year since 2005. 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 18 years. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down The Travelers Companies Inc's Dividend Yield and Growth
As of today, The Travelers Companies Inc currently has a 12-month trailing dividend yield of 2.34% and a 12-month forward dividend yield of 2.47%. This suggests an expectation of increased dividend payments over the next 12 months.
Over the past three years, The Travelers Companies Inc's annual dividend growth rate was 4.30%. Extended to a five-year horizon, this rate increased to 5.20% per year. And over the past decade, The Travelers Companies Inc's annual dividends per share growth rate stands at 7.60%.
Based on The Travelers Companies Inc's dividend yield and five-year growth rate, the 5-year yield on cost of The Travelers Companies Inc stock as of today is approximately 3.02%.
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 2023-06-30, The Travelers Companies Inc's dividend payout ratio is 0.40.
The Travelers Companies Inc's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks The Travelers Companies Inc's profitability 7 out of 10 as of 2023-06-30, suggesting good profitability prospects. The company has reported positive net income for each of the year over the past decade, further solidifying its high profitability.
Growth Metrics: The Future Outlook
To ensure the sustainability of dividends, a company must have robust growth metrics. The Travelers Companies 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 The Travelers Companies Inc's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. The Travelers Companies Inc's revenue has increased by approximately 8.50% per year on average, a rate that outperforms than approximately 65.72% 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, The Travelers Companies Inc's earnings increased by approximately 5.90% per year on average, a rate that outperforms than approximately 55.31% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of 11.40%, which outperforms than approximately 68.77% of global competitors.
Next Steps
Given The Travelers Companies Inc's consistent dividend payments, a healthy growth rate, a sustainable payout ratio, and solid profitability and growth metrics, it appears to be a promising candidate for dividend investors. However, as with all investments, it's essential to do your due diligence and consider your financial goals and risk tolerance before making a decision.
GuruFocus Premium users can screen for high-dividend yield stocks using the High Dividend Yield Screener.
This article first appeared on GuruFocus.
