FBL Financial Group, Inc. (NYSE:FFG) stock is about to trade ex-dividend in 3 days. If you purchase the stock on or after the 14th of September, you won’t be eligible to receive this dividend, when it is paid on the 30th of September.
FBL Financial Group’s next dividend payment will be US$0.50 per share. Last year, in total, the company distributed US$3.50 to shareholders. Last year’s total dividend payments show that FBL Financial Group has a trailing yield of 7.0% on the current share price of $50.25. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. As a result, readers should always check whether FBL Financial Group has been able to grow its dividends, or if the dividend might be cut.
Dividends are typically paid out of company income, so if a company pays out more than it earned, its dividend is usually at a higher risk of being cut. FBL Financial Group paid out 58% of its earnings to investors last year, a normal payout level for most businesses.
When a company paid out less in dividends than it earned in profit, this generally suggests its dividend is affordable. The lower the % of its profit that it pays out, the greater the margin of safety for the dividend if the business enters a downturn.
Have Earnings And Dividends Been Growing?
Companies with falling earnings are riskier for dividend shareholders. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. Readers will understand then, why we’re concerned to see FBL Financial Group’s earnings per share have dropped 5.3% a year over the past five years. Such a sharp decline casts doubt on the future sustainability of the dividend.
The main way most investors will assess a company’s dividend prospects is by checking the historical rate of dividend growth. Since the start of our data, 10 years ago, FBL Financial Group has lifted its dividend by approximately 30% a year on average. That’s interesting, but the combination of a growing dividend despite declining earnings can typically only be achieved by paying out more of the company’s profits. This can be valuable for shareholders, but it can’t go on forever.
Is FBL Financial Group worth buying for its dividend? We’re not overly enthused to see FBL Financial Group’s earnings in retreat at the same time as the company is paying out more than half of its earnings as dividends to shareholders. This is not an overtly appealing combination of characteristics, and we’re just not that interested in this company’s dividend.
Although, if you’re still interested in FBL Financial Group and want to know more, you’ll find it very useful to know what risks this stock faces. Every company has risks, and we’ve spotted 2 warning signs for FBL Financial Group you should know about.
A common investment mistake is buying the first interesting stock you see. Here you can find a list of promising dividend stocks with a greater than 2% yield and an upcoming dividend.
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This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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