Yahoo Finance This is Why Cigna (CI) is a Great Dividend Stock
All investors love getting big returns from their portfolio, whether it's through stocks, bonds, ETFs, or other types of securities. However, when you're an income investor, your primary focus is generating consistent cash flow from each of your liquid investments.
While cash flow can come from bond interest or interest from other types of investments, income investors hone in on dividends. A dividend is the distribution of a company's earnings paid out to shareholders; it's often viewed by its dividend yield, a metric that measures a dividend as a percent of the current stock price. Many academic studies show that dividends account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.
Cigna in Focus
Cigna (CI) is headquartered in Bloomfield, and is in the Finance sector. The stock has seen a price change of -25.76% since the start of the year. The health insurer is currently shelling out a dividend of $1.23 per share, with a dividend yield of 2%. This compares to the Insurance - Multi line industry's yield of 2.27% and the S&P 500's yield of 1.76%.
In terms of dividend growth, the company's current annualized dividend of $4.92 is up 9.8% from last year. Over the last 5 years, Cigna has increased its dividend 3 times on a year-over-year basis for an average annual increase of 306.36%. Looking ahead, future dividend growth will be dependent on earnings growth and payout ratio, which is the proportion of a company's annual earnings per share that it pays out as a dividend. Cigna's current payout ratio is 19%. This means it paid out 19% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, CI expects solid earnings growth. The Zacks Consensus Estimate for 2023 is $24.78 per share, which represents a year-over-year growth rate of 6.49%.
Bottom Line
Investors like dividends for many reasons; they greatly improve stock investing profits, decrease overall portfolio risk, and carry tax advantages, among others. However, not all companies offer a quarterly payout.
For instance, it's a rare occurrence when a tech start-up or big growth business offers their shareholders a dividend. It's more common to see larger companies with more established profits give out dividends. During periods of rising interest rates, income investors must be mindful that high-yielding stocks tend to struggle. With that in mind, CI is a compelling investment opportunity. Not only is it a strong dividend play, but the stock currently sits at a Zacks Rank of 3 (Hold).
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Cigna Group (CI) : Free Stock Analysis Report
