Over the past 10 years The Travelers Companies Inc (NYSE:TRV) has returned an average of 3.00% per year from dividend payouts. The stock currently pays out a dividend yield of 2.37%, and has a market cap of US$35.17B. Let’s dig deeper into whether Travelers Companies should have a place in your portfolio. Check out our latest analysis for Travelers Companies
5 checks you should do on a dividend stock
When assessing a stock as a potential addition to my dividend Portfolio, I look at these five areas:
- Is it the top 25% annual dividend yield payer?
- Has it paid dividend every year without dramatically reducing payout in the past?
- Has it increased its dividend per share amount over the past?
- Can it afford to pay the current rate of dividends from its earnings?
- Will it be able to continue to payout at the current rate in the future?
How does Travelers Companies fare?
The company currently pays out 37.70% of its earnings as a dividend, according to its trailing twelve-month data, meaning the dividend is sufficiently covered by earnings. In the near future, analysts are predicting lower payout ratio of 28.74%, leading to a dividend yield of around 2.47%. However, EPS should increase to $10.8, meaning that the lower payout ratio does not necessarily implicate a lower dividend payment. Reliablity is an important factor for dividend stocks, particularly for income investors who want a strong track record of payment and a positive outlook for future payout. TRV has increased its DPS from $1.2 to $3.08 in the past 10 years. It has also been paying out dividend consistently during this time, as you’d expect for a company increasing its dividend levels. These are all positive signs of a great, reliable dividend stock. In terms of its peers, Travelers Companies produces a yield of 2.37%, which is on the low-side for Insurance stocks.
Keeping in mind the dividend characteristics above, Travelers Companies is definitely worth considering for investors looking to build a dedicated income portfolio. Given that this is purely a dividend analysis, you should always research extensively before deciding whether or not a stock is an appropriate investment for you. I always recommend analysing the company’s fundamentals and underlying business before making an investment decision. There are three fundamental factors you should further examine:
- Future Outlook: What are well-informed industry analysts predicting for TRV’s future growth? Take a look at our free research report of analyst consensus for TRV’s outlook.
- Valuation: What is TRV 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 TRV is currently mispriced by the market.
- Other Dividend Rockstars: Are there better dividend payers with stronger fundamentals out there? Check out our free list of these great stocks here.
To help readers see pass 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.