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Have you been keeping an eye on Zurich Insurance Group AG's (VTX:ZURN) upcoming dividend of US$19.00 per share payable on the 09 April 2019? Then you only have 4 days left before the stock starts trading ex-dividend on the 05 April 2019. Investors looking for higher income-generating stocks to add to their portfolio should keep reading, as I take a deeper dive into Zurich Insurance Group's latest financial data to analyse its dividend attributes.
See our latest analysis for Zurich Insurance Group
What Is A Dividend Rock Star?
It is a stock that pays a stable and consistent dividend, having done so reliably for the past decade with the expectation of this continuing into the future. More specifically:
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Its annual yield is among the top 25% of dividend payers
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It consistently pays out dividend without missing a payment or significantly cutting payout
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Its has increased its dividend per share amount over the past
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It can afford to pay the current rate of dividends from its earnings
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It is able to continue to payout at the current rate in the future
High Yield And Dependable
The company's dividend yield stands at 5.4%, which is high for Insurance stocks. But the real reason Zurich Insurance Group stands out is because it has a high chance of being able to continue to pay dividend at this level for years to come, something that is quite desirable if you are looking to create a portfolio that generates a steady stream of income.
Reliablity is an important factor for dividend stocks, particularly for income investors who want a strong track record of payment and a positive outlook for future payout. In the case of ZURN it has increased its DPS from $6.7 to $17.8 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. This is an impressive feat, which makes ZURN a true dividend rockstar.
The company currently pays out 74% of its earnings as a dividend, according to its trailing twelve-month data, meaning the dividend is sufficiently covered by earnings. Going forward, analysts expect ZURN's payout to remain around the same level at 71% of its earnings. Assuming a constant share price, this equates to a dividend yield of 6.5%. Furthermore, EPS should increase to $27.42.
When assessing the forecast sustainability of a dividend it is also worth considering the cash flow of the business. A company with strong cash flow, relative to earnings, can sometimes sustain a high pay out ratio.