Over the past 10 years United Fire Group Inc (NASDAQ:UFCS) has returned an average of 3.00% per year from dividend payouts. The company is currently worth US$1.19B, and now yields roughly 2.34%. Should it have a place in your portfolio? Let’s take a look at United Fire Group in more detail. View our latest analysis for United Fire Group
5 questions to ask before buying a dividend stock
When assessing a stock as a potential addition to my dividend Portfolio, I look at these five areas:
- Is its annual yield among the top 25% of dividend-paying companies?
- Has it paid dividend every year without dramatically reducing payout in the past?
- Has dividend per share risen in the past couple of years?
- Can it afford to pay the current rate of dividends from its earnings?
- Based on future earnings growth, will it be able to continue to payout dividend at the current rate?
How does United Fire Group fare?
United Fire Group has a trailing twelve-month payout ratio of 60.98%, meaning the dividend is sufficiently covered by earnings. In the near future, analysts are predicting lower payout ratio of 51.66%, leading to a dividend yield of 2.76%. However, EPS should increase to $2.7, meaning that the lower payout ratio does not necessarily implicate a lower dividend payment. If there is one thing that you want to be reliable in your life, it’s dividend stocks and their constant income stream. UFCS has increased its DPS from $0.6 to $1.12 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, United Fire Group has a yield of 2.34%, which is on the low-side for Insurance stocks.
With this in mind, I definitely rank United Fire Group as a strong dividend stock, and makes it worth further research for anyone who likes steady income generation from their portfolio. Given that 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 important aspects you should further research:
- Future Outlook: What are well-informed industry analysts predicting for UFCS’s future growth? Take a look at our free research report of analyst consensus for UFCS’s outlook.
- Valuation: What is UFCS 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 UFCS 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.