If you are interested in cashing in on The Hartford Financial Services Group Inc’s (NYSE:HIG) upcoming dividend of US$0.30 per share, you only have 2 days left to buy the shares before its ex-dividend date, 31 August 2018, in time for dividends payable on the 01 October 2018. What does this mean for current shareholders and potential investors? Below, I will explain how holding Hartford Financial Services Group can impact your portfolio income stream, by analysing the stock’s most recent financial data and dividend attributes.
5 checks you should do on a dividend stock
When researching a dividend stock, I always follow the following screening criteria:
- Is it paying an annual yield above 75% of dividend payers?
- Has its dividend been stable over the past (i.e. no missed payments or significant payout cuts)?
- Has the amount of dividend per share grown over the past?
- Is its earnings sufficient to payout dividend at the current rate?
- Will it be able to continue to payout at the current rate in the future?
Does Hartford Financial Services Group pass our checks?
The current trailing twelve-month payout ratio for the stock is 78.2%, which means that the dividend is covered by earnings. However, going forward, analysts expect HIG’s payout to fall to 24.8% of its earnings, which leads to a dividend yield of around 2.4%. However, EPS should increase to $5.19, meaning that the lower payout ratio does not necessarily implicate a lower dividend payment.
If dividend is a key criteria in your investment consideration, then you need to make sure the dividend stock you’re eyeing out is reliable in its payments. Not only have dividend payouts from Hartford Financial Services Group fallen over the past 10 years, it has also been highly volatile during this time, with drops of over 25% in some years. This means that dividend hunters should probably steer clear of the stock, at least for now until the track record improves.
In terms of its peers, Hartford Financial Services Group produces a yield of 2.4%, which is on the low-side for Insurance stocks.
If you are building an income portfolio, then Hartford Financial Services Group is a complicated choice since it has some positive aspects as well as negative ones. However, if you are not strictly just a dividend investor, the stock could still offer some interesting investment opportunities. Given that this is purely a dividend analysis, I recommend taking sufficient time to understand its core business and determine whether the company and its investment properties suit your overall goals. There are three fundamental aspects you should look at:
- Future Outlook: What are well-informed industry analysts predicting for HIG’s future growth? Take a look at our free research report of analyst consensus for HIG’s outlook.
- Valuation: What is HIG 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 HIG is currently mispriced by the market.
- Dividend Rockstars: Are there better dividend payers with stronger fundamentals out there? Check out our free list of these great stocks here.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at email@example.com.