Reinsurance Group of America's (NYSE:RGA) Upcoming Dividend Will Be Larger Than Last Year's

Reinsurance Group of America, Incorporated (NYSE:RGA) will increase its dividend from last year's comparable payment on the 27th of August to $0.89. The payment will take the dividend yield to 1.7%, which is in line with the average for the industry.

See our latest analysis for Reinsurance Group of America

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

We like to see a healthy dividend yield, but that is only helpful to us if the payment can continue. Before making this announcement, Reinsurance Group of America was easily earning enough to cover the dividend. As a result, a large proportion of what it earned was being reinvested back into the business.

The next year is set to see EPS grow by 91.9%. If the dividend continues on this path, the payout ratio could be 15% by next year, which we think can be pretty sustainable going forward.

Reinsurance Group of America Has A Solid Track Record

The company has a sustained record of paying dividends with very little fluctuation. Since 2014, the dividend has gone from $1.20 total annually to $3.56. This works out to be a compound annual growth rate (CAGR) of approximately 11% a year 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.

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. However, Reinsurance Group of America's EPS was effectively flat over the past five years, which could stop the company from paying more every year. While EPS growth is quite low, Reinsurance Group of America has the option to increase the payout ratio to return more cash to shareholders.

Reinsurance Group of America Looks Like A Great Dividend Stock

Overall, a dividend increase is always good, and we think that Reinsurance Group of America is a strong income stock thanks to its track record and growing earnings. 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.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. Companies that are growing earnings tend to be the best dividend stocks over the long term. See what the 10 analysts we track are forecasting for Reinsurance Group of America for free with public analyst estimates for the company. Is Reinsurance Group of America not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com