Yahoo Finance Why Principal Financial (PFG) is a Great Dividend Stock Right Now
Whether it's through stocks, bonds, ETFs, or other types of securities, all investors love seeing their portfolios score big returns. But for income investors, generating consistent cash flow from each of your liquid investments is your primary focus.
Cash flow can come from bond interest, interest from other types of investments, and of course, dividends. A dividend is that coveted distribution of a company's earnings paid out to shareholders, and investors often view it by its dividend yield, a metric that measures the 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.
Principal Financial in Focus
Principal Financial (PFG) is headquartered in Des Moines, and is in the Finance sector. The stock has seen a price change of 1.7% since the start of the year. Currently paying a dividend of $0.71 per share, the company has a dividend yield of 3.55%. In comparison, the Financial - Investment Management industry's yield is 3.09%, while the S&P 500's yield is 1.59%.
Taking a look at the company's dividend growth, its current annualized dividend of $2.84 is up 9.2% from last year. Over the last 5 years, Principal Financial has increased its dividend 3 times on a year-over-year basis for an average annual increase of 5.15%. Future dividend growth will depend on earnings growth as well as payout ratio, which is the proportion of a company's annual earnings per share that it pays out as a dividend. Principal Financial's current payout ratio is 41%. This means it paid out 41% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for PFG for this fiscal year. The Zacks Consensus Estimate for 2024 is $7.50 per share, which represents a year-over-year growth rate of 14.50%.
Bottom Line
From greatly improving stock investing profits and reducing overall portfolio risk to providing tax advantages, investors like dividends for a variety of different reasons. But, not every company offers a quarterly payout.
High-growth firms or tech start-ups, for example, rarely provide their shareholders a dividend, while larger, more established companies that have more secure profits are often seen as the best dividend options. Income investors have to be mindful of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. With that in mind, PFG 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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Principal Financial Group, Inc. (PFG) : Free Stock Analysis Report
