Board of Directors QBE Insurance Group Limited (ASX:QBE) announced a dividend of $0.30 on April 14, an increase from last year’s comparable dividend. Based on this payout, the dividend yield for the company would be 2.6%, which is fairly typical for the industry.
Check out our latest analysis for QBE Insurance Group
QBE Insurance Group Payout Covers Solid Earnings
Fixed dividend yields are great, but they only really help us if the payout is sustainable. Prior to this announcement, QBE Insurance Group’s dividends were comfortably covered by both cash flow and earnings. This means that a large part of his earnings is kept to grow the business.
Next year EPS is expected to increase by 118.9%. If the dividend continues on recent trends, we estimate a payout ratio of 32%, which is within a range that makes us comfortable with dividend sustainability.
The company has a long track record of dividends, but has not looked good with cuts in the past. Since 2013, the dividend has increased from $0.841 to $0.268 per year. This results in a reduction of approximately 68% over that time. A company that cuts its dividend over time is generally not what we’re looking for.
Dividend Looks Like It Will Increase
With a relatively volatile dividend and a poor history of declining dividends, it’s even more important to see EPS grow. It is encouraging to see that QBE Insurance Group has grown its earnings per share by 31% annually over the past five years. The company has no problem growing even though it returns a lot of capital to shareholders, which is a great combination to have for a dividend stock.
We really like QBE Insurance Group’s dividend
In summary, it’s always positive to see a dividend increase, and we’re particularly pleased with its overall sustainability. Earnings easily cover distributions and the company makes a lot of money. Overall, this checks many of the boxes we look for when choosing an income stock.
Companies that have a stable dividend policy will enjoy more investor interest than those that suffer from a more erratic approach. However, investors should consider a number of factors other than dividend payments when analyzing a company. Companies that grow earnings tend to be the best dividend stocks over the long term. See what the 12 analysts we follow are predicting for QBE Insurance Group for free with public analyst estimates for the company. If you are a dividend investor, you may want to check us out A curated list of high yielding dividend stocks.
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This article by Simply Wall St is general in nature. We only provide commentary based on historical data and analyst forecasts using an unbiased methodology, and our articles are not intended as financial advice. This is not a recommendation to buy or sell any stock and does not take into account your goals or financial situation. We aim to provide you with long-term focused analysis based on fundamental data. Please note that our analysis cannot influence the latest price-sensitive company announcements or quality material. Simply Wall St has no position in the listed stocks.
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