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There is a lot to be liked about Münchener Rückversicherungs-Gesellschaft Aktiengesellschaft (FRA:MUV2) as an income stock. It has paid dividends over the past 10 years. The stock currently pays out a dividend yield of 4.2%, and has a market cap of €30b. Does Münchener Rückversicherungs-Gesellschaft tick all the boxes of a great dividend stock? Below, I’ll take you through my analysis.
5 checks you should use to assess a dividend stock
When assessing a stock as a potential addition to my dividend Portfolio, I look at these five areas:
- Is their annual yield among the top 25% of dividend payers?
- Has its dividend been stable over the past (i.e. no missed payments or significant payout cuts)?
- Has dividend per share risen in the past couple of years?
- Can it afford to pay the current rate of dividends from its earnings?
- Will it have the ability to keep paying its dividends going forward?
Does Münchener Rückversicherungs-Gesellschaft pass our checks?
The company currently pays out 50% of its earnings as a dividend, according to its trailing twelve-month data, which means that the dividend is covered by earnings. In the near future, analysts are predicting a payout ratio of 54% which, assuming the share price stays the same, leads to a dividend yield of 5.0%. Moreover, EPS should increase to €17.41.
When assessing the forecast sustainability of a dividend it is also worth considering the cash flow of the business. A business with strong cash flow can sustain a higher divided payout ratio than a company with weak cash flow.
If there’s one type of stock you want to be reliable, it’s dividend stocks and their stable income-generating ability. In the case of MUV2 it has increased its DPS from €5.5 to €8.6 in the past 10 years. During this period it has not missed a payment, as one would expect for a company increasing its dividend. This is an impressive feat, which makes MUV2 a true dividend rockstar.
Relative to peers, Münchener Rückversicherungs-Gesellschaft produces a yield of 4.2%, which is high for Insurance stocks.
Considering the dividend attributes we analyzed above, Münchener Rückversicherungs-Gesellschaft is definitely worth keeping an eye on for someone looking to build a dedicated income portfolio. Given that this is purely a dividend analysis, you should always research extensively before deciding whether or not a stock is an appropriate investment for you. I always recommend analysing the company’s fundamentals and underlying business before making an investment decision. Below, I’ve compiled three relevant aspects you should look at:
- Future Outlook: What are well-informed industry analysts predicting for MUV2’s future growth? Take a look at our free research report of analyst consensus for MUV2’s outlook.
- Valuation: What is MUV2 worth today? Even if the stock is a cash cow, it’s not worth an infinite price. The intrinsic value infographic in our free research report helps visualize whether MUV2 is currently mispriced by the market.
- Other Dividend Rockstars: Are there better dividend payers with stronger fundamentals out there? Check out our free list of these great stocks here.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.