Cigna Group (NYSE:CI) Is Increasing Its Dividend To $1.51

The Cigna Group's (NYSE:CI) dividend will be increasing from last year's payment of the same period to $1.51 on 20th of March. This takes the dividend yield to 2.0%, which shareholders will be pleased with.

View our latest analysis for Cigna Group

Cigna Group's Projected Earnings Seem Likely To Cover Future Distributions

A big dividend yield for a few years doesn't mean much if it can't be sustained. Prior to this announcement, Cigna Group's dividend was comfortably covered by both cash flow and earnings. This indicates that a lot of the earnings are being reinvested into the business, with the aim of fueling growth.

Looking forward, earnings per share is forecast to rise by 145.9% over the next year. If the dividend continues on this path, the payout ratio could be 26% by next year, which we think can be pretty sustainable going forward.

Cigna Group Has A Solid Track Record

The company has an extended history of paying stable dividends. The annual payment during the last 10 years was $0.04 in 2015, and the most recent fiscal year payment was $6.04. This works out to be a compound annual growth rate (CAGR) of approximately 65% a year over that time. So, dividends have been growing pretty quickly, and even more impressively, they haven't experienced any notable falls during this period.

Cigna Group May Find It Hard To Grow The Dividend

Investors could be attracted to the stock based on the quality of its payment history. However, things aren't all that rosy. Unfortunately, Cigna Group's earnings per share has been essentially flat over the past five years, which means the dividend may not be increased each year.

In Summary

Overall, this is a reasonable dividend, and it being raised is an added bonus. While the payments look sustainable for now, earnings have been shrinking so the dividend could come under pressure in the future. The dividend looks okay, but there have been some issues in the past, so we would be a little bit cautious.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. As an example, we've identified 3 warning signs for Cigna Group that you should be aware of before investing. Is Cigna Group not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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