Reinsurance Group of America (NYSE:RGA) Has Announced A Dividend Of US$0.70

The board of Reinsurance Group of America, Incorporated (NYSE:RGA) has announced that it will pay a dividend on the 1st of June, with investors receiving US$0.70 per share. This means the dividend yield will be fairly typical at 2.2%.

View our latest analysis for Reinsurance Group of America

Reinsurance Group of America's Dividend Is Well Covered By Earnings

Solid dividend yields are great, but they only really help us if the payment is sustainable. However, prior to this announcement, Reinsurance Group of America's dividend was comfortably covered by both cash flow and earnings. This means that most of what the business earns is being used to help it grow.

The next year is set to see EPS grow by 18.2%. Assuming the dividend continues along recent trends, we think the payout ratio could be 28% by next year, which is in a pretty sustainable range.

Reinsurance Group of America Has A Solid Track Record

Even over a long history of paying dividends, the company's distributions have been remarkably stable. Since 2011, the dividend has gone from US$0.48 to US$2.80. This works out to be a compound annual growth rate (CAGR) of approximately 19% 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.

We Could See Reinsurance Group of America's Dividend Growing

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. Reinsurance Group of America has impressed us by growing EPS at 6.8% per year over the past five years. With a decent amount of growth and a low payout ratio, we think this bodes well for Reinsurance Group of America's prospects of growing its dividend payments in the future.

We'd also point out that Reinsurance Group of America has issued stock equal to 10% of shares outstanding. Regularly doing this can be detrimental - it's hard to grow dividends per share when new shares are regularly being created.

We Really Like Reinsurance Group of America's Dividend

Overall, we think that this is a great income investment, and we think that maintaining the dividend this year may have been a conservative choice. Earnings are easily covering distributions, and the company is generating plenty of cash. All in all, this checks a lot of the boxes we look for when choosing an income stock.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. As an example, we've identified 1 warning sign for Reinsurance Group of America that you should be aware of before investing. We have also put together a list of global stocks with a solid dividend.

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