Exploring the Sustainability and Growth of RGA's Dividend
Reinsurance Group of America Inc (RGA, Financial) recently announced a dividend of $0.85 per share, payable on 2024-02-27, with the ex-dividend date set for 2024-02-12. 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 look into Reinsurance Group of America Inc's dividend performance and assess its sustainability.
What Does Reinsurance Group of America Inc Do?
Reinsurance Group of America Inc is an insurance holding company with operations in the United States, Latin America, Canada, Europe, Africa, Asia, and Australia. The core products and services include life reinsurance, living benefits reinsurance, group reinsurance, health reinsurance, financial solutions, facultative underwriting, and product development. The company's operations are divided into traditional and financial solution businesses.
A Glimpse at Reinsurance Group of America Inc's Dividend History
Reinsurance Group of America Inc has maintained a consistent dividend payment record since 2006. Dividends are currently distributed on a quarterly basis.
Reinsurance Group of America Inc has increased its dividend each year since 2006. 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 Reinsurance Group of America Inc's Dividend Yield and Growth
As of today, Reinsurance Group of America Inc currently has a 12-month trailing dividend yield of 1.97% and a 12-month forward dividend yield of 2.03%. This suggests an expectation of increased dividend payments over the next 12 months.
Over the past three years, Reinsurance Group of America Inc's annual dividend growth rate was 5.60%. Extended to a five-year horizon, this rate increased to 11.20% per year. And over the past decade, Reinsurance Group of America Inc's annual dividends per share growth rate stands at an impressive 13.90%.
Based on Reinsurance Group of America Inc's dividend yield and five-year growth rate, the 5-year yield on cost of Reinsurance Group of America Inc stock as of today is approximately 3.37%.
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 2023-12-31, Reinsurance Group of America Inc's dividend payout ratio is 0.19.
Reinsurance Group of America Inc's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Reinsurance Group of America Inc's profitability 6 out of 10 as of 2023-12-31, suggesting fair profitability. The company has reported positive net income for each of 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. Reinsurance Group of America Inc'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 Reinsurance Group of America Inc's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Reinsurance Group of America Inc's revenue has increased by approximately 1.90% per year on average, a rate that underperforms approximately 60.36% 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, Reinsurance Group of America Inc's earnings decreased by approximately -12.20% per year on average, a rate that underperforms approximately 73.98% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of -17.80%, which underperforms approximately 92.78% of global competitors.
Next Steps
In conclusion, while Reinsurance Group of America Inc has demonstrated a solid track record of dividend payments and growth, its recent financial performance raises questions about the long-term sustainability of its dividend growth. The payout ratio remains low, which is a positive sign for dividend sustainability. However, the company's growth metrics, particularly its EPS and EBITDA growth rates, suggest that there may be challenges ahead. Investors should consider these factors and monitor the company's future earnings reports and strategic initiatives to ensure that the dividends can be sustained or grown over time. For those seeking additional investment opportunities, GuruFocus Premium users can screen for high-dividend yield stocks using the High Dividend Yield Screener.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
