Safety Insurance Group (NASDAQ:SAFT) Is Paying Out A Dividend Of $0.90

Safety Insurance Group, Inc. (NASDAQ:SAFT) will pay a dividend of $0.90 on the 13th of June. The dividend yield will be 4.6% based on this payment which is still above the industry average.

Our free stock report includes 1 warning sign investors should be aware of before investing in Safety Insurance Group. Read for free now.

Safety Insurance Group's Payment Could Potentially Have Solid Earnings Coverage

While it is great to have a strong dividend yield, we should also consider whether the payment is sustainable. Prior to this announcement, Safety Insurance Group's dividend made up quite a large proportion of earnings but only 43% of free cash flows. Since the dividend is just paying out cash to shareholders, we care more about the cash payout ratio from which we can see plenty is being left over for reinvestment in the business.

EPS is set to grow by 1.9% over the next year if recent trends continue. If the dividend continues along recent trends, we estimate the payout ratio could reach 75%, which is on the higher side, but certainly still feasible.

View our latest analysis for Safety Insurance Group

Safety Insurance Group 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. The dividend has gone from an annual total of $2.80 in 2015 to the most recent total annual payment of $3.60. This implies that the company grew its distributions at a yearly rate of about 2.5% over that duration. Dividends have grown relatively slowly, which is not great, but some investors may value the relative consistency of the dividend.

The Dividend's Growth Prospects Are Limited

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. Safety Insurance Group hasn't seen much change in its earnings per share over the last five years. Slow growth and a high payout ratio could mean that Safety Insurance Group has maxed out the amount that it has been able to pay to shareholders. When a company prefers to pay out cash to its shareholders instead of reinvesting it, this can often say a lot about that company's dividend prospects.

We Really Like Safety Insurance Group's Dividend

In summary, it is good to see that the dividend is staying consistent, and we don't think there is any reason to suspect this might change over the medium term. Distributions are quite easily covered by earnings, which are also being converted to cash flows. All of these factors considered, we think this has solid potential as a dividend stock.

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. For instance, we've picked out 1 warning sign for Safety Insurance Group that investors should take into consideration. Is Safety Insurance Group not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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