Assicurazioni Generali (BIT:G) Is Increasing Its Dividend To €1.28

The board of Assicurazioni Generali S.p.A. (BIT:G) has announced that it will be paying its dividend of €1.28 on the 22nd of May, an increased payment from last year's comparable dividend. This takes the annual payment to 5.5% of the current stock price, which is about average for the industry.

View our latest analysis for Assicurazioni Generali

Assicurazioni Generali's Payment Has Solid Earnings Coverage

Solid dividend yields are great, but they only really help us if the payment is sustainable. Prior to this announcement, Assicurazioni Generali's dividend was only 54% of earnings, however it was paying out 130% of free cash flows. While the company may be more focused on returning cash to shareholders than growing the business at this time, we think that a cash payout ratio this high might expose the dividend to being cut if the business ran into some challenges.

Over the next year, EPS is forecast to expand by 17.9%. If the dividend continues on this path, the payout ratio could be 51% by next year, which we think can be pretty sustainable going forward.

Assicurazioni Generali Has A Solid Track Record

The company has been paying a dividend for a long time, and it has been quite stable which gives us confidence in the future dividend potential. Since 2014, the annual payment back then was €0.45, compared to the most recent full-year payment of €1.28. This means that it has been growing its distributions at 11% per annum over that time. It is good to see that there has been strong dividend growth, and that there haven't been any cuts for a long time.

The Dividend Looks Likely To Grow

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. It's encouraging to see that Assicurazioni Generali has been growing its earnings per share at 11% a year over the past five years. The lack of cash flows does make us a bit cautious though, especially when it comes to the future of the dividend.

Our Thoughts On Assicurazioni Generali's Dividend

Overall, we always like to see the dividend being raised, but we don't think Assicurazioni Generali will make a great income stock. While the low payout ratio is a redeeming feature, this is offset by the minimal cash to cover the payments. This company is not in the top tier of income providing stocks.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. However, there are other things to consider for investors when analysing stock performance. For instance, we've picked out 2 warning signs for Assicurazioni Generali that investors should take into consideration. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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