Everest Re Group's (NYSE:RE) Shareholders Will Receive A Bigger Dividend Than Last Year

By
Simply Wall St
Published
May 16, 2022
NYSE:RE
Source: Shutterstock

Everest Re Group, Ltd. (NYSE:RE) has announced that it will be increasing its dividend on the 17th of June to US$1.65, which will be 6.5% higher than last year. Based on the announced payment, the dividend yield for the company will be 2.2%, which is fairly typical for the industry.

Check out our latest analysis for Everest Re Group

Everest Re Group's Payment Has Solid Earnings Coverage

While it is always good to see a solid dividend yield, we should also consider whether the payment is feasible. However, Everest Re Group's earnings easily cover the dividend. This means that most of what the business earns is being used to help it grow.

Over the next year, EPS is forecast to expand by 0.4%. If the dividend continues along recent trends, we estimate the payout ratio will be 20%, which is in the range that makes us comfortable with the sustainability of the dividend.

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NYSE:RE Historic Dividend May 16th 2022

Everest Re Group Has A Solid Track Record

Even over a long history of paying dividends, the company's distributions have been remarkably stable. Since 2012, the first annual payment was US$1.92, compared to the most recent full-year payment of US$6.20. This means that it has been growing its distributions at 12% 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.

Dividend Growth May Be Hard To Achieve

Investors could be attracted to the stock based on the quality of its payment history. Earnings have grown at around 4.4% a year for the past five years, which isn't massive but still better than seeing them shrink. If Everest Re Group is struggling to find viable investments, it always has the option to increase its payout ratio to pay more to shareholders.

We Really Like Everest Re Group's Dividend

Overall, we think this could be an attractive income stock, and it is only getting better by paying a higher dividend this year. The company is easily earning enough to cover its dividend payments and it is great to see that these earnings are being translated into cash flow. All in all, this checks a lot of the boxes we look for when choosing an income stock.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. However, there are other things to consider for investors when analysing stock performance. For example, we've picked out 1 warning sign for Everest Re Group that investors should know about before committing capital to this stock. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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