Unraveling Cincinnati Financial Corp's Dividend Landscape: A Comprehensive Analysis
Exploring the Dividend History, Growth, and Sustainability of Cincinnati Financial Corp (NASDAQ:CINF)
Cincinnati Financial Corp(NASDAQ:CINF) recently announced a dividend of $0.75 per share, payable on 2023-10-16, with the ex-dividend date set for 2023-09-15. 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 Cincinnati Financial Corps dividend performance and assess its sustainability.
What Does Cincinnati Financial Corp Do?
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Cincinnati Financial Corp is a property and casualty insurance company that generates income through written premiums. A select group of independent agencies actively markets the company's business, home, and automotive insurance within their communities. These agents offer the company's personal lines as well as its standard market, excess, and surplus commercial line policies in many regions in the United States. Cincinnati Financial also offers leasing and financing services. The company operates in segments: Commercial lines insurance, Personal lines insurance, and Excess and surplus lines insurance, Life insurance, and Investments. The vast majority of the company's revenue is generated through commercial lines, followed by personal lines.
A Glimpse at Cincinnati Financial Corp's Dividend History
Cincinnati Financial Corp has maintained a consistent dividend payment record since 1961. Dividends are currently distributed on a quarterly basis. Cincinnati Financial Corp has increased its dividend each year since 1961. The stock is thus listed as a dividend king, an honor that is given to companies that have increased their dividend each year for at least the past 62 years. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Cincinnati Financial Corp's Dividend Yield and Growth
As of today, Cincinnati Financial Corp currently has a 12-month trailing dividend yield of 2.68% and a 12-month forward dividend yield of 2.79%. This suggests an expectation of increase dividend payments over the next 12 months.
Over the past three years, Cincinnati Financial Corp's annual dividend growth rate was 7.20%. Extended to a five-year horizon, this rate decreased to 6.50% per year. And over the past decade, Cincinnati Financial Corp's annual dividends per share growth rate stands at 5.40%.
Based on Cincinnati Financial Corp's dividend yield and five-year growth rate, the 5-year yield on cost of Cincinnati Financial Corp stock as of today is approximately 3.67%.
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, Cincinnati Financial Corp's dividend payout ratio is 0.34.
Cincinnati Financial Corp's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Cincinnati Financial Corp's profitability 6 out of 10 as of 2023-06-30, suggesting fair profitability. The company has reported net profit in 9 years out of past 10 years.
Growth Metrics: The Future Outlook
To ensure the sustainability of dividends, a company must have robust growth metrics. Cincinnati Financial Corp's growth rank of 6 out of 10 suggests that the company has a fair growth outlook.
Revenue is the lifeblood of any company, and Cincinnati Financial Corp's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Cincinnati Financial Corp's revenue has increased by approximately -4.90% per year on average, a rate that underperforms than approximately 80.57% of global competitors.
Conclusion
Considering Cincinnati Financial Corp's consistent dividend payment record, a fair dividend growth rate, a sustainable payout ratio, and decent profitability and growth metrics, the company seems to present a reliable dividend investment opportunity. However, investors should also consider the company's revenue growth rate and its performance relative to its global competitors. With its strong dividend history and future prospects, Cincinnati Financial Corp continues to be an attractive option for value investors looking for consistent returns.
GuruFocus Premium users can screen for high-dividend yield stocks using the High Dividend Yield Screener.
This article first appeared on GuruFocus.
