Travelers Companies (NYSE:TRV) Will Pay A Larger Dividend Than Last Year At $0.93

The Travelers Companies, Inc. (NYSE:TRV) has announced that it will be increasing its dividend from last year's comparable payment on the 30th of September to $0.93. Based on this payment, the dividend yield for the company will be 2.3%, which is fairly typical for the industry.

View our latest analysis for Travelers Companies

Travelers Companies' Payment Has Solid Earnings Coverage

Unless the payments are sustainable, the dividend yield doesn't mean too much. However, prior to this announcement, Travelers Companies' 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.

Over the next year, EPS is forecast to expand by 11.6%. If the dividend continues on this path, the payout ratio could be 23% by next year, which we think can be pretty sustainable going forward.

Travelers Companies 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. Since 2012, the annual payment back then was $1.64, compared to the most recent full-year payment of $3.72. This means that it has been growing its distributions at 8.5% per annum over that time. The growth of the dividend has been pretty reliable, so we think this can offer investors some nice additional income in their portfolio.

We Could See Travelers Companies' Dividend Growing

The company's investors will be pleased to have been receiving dividend income for some time. We are encouraged to see that Travelers Companies has grown earnings per share at 8.0% per year over the past five years. With a decent amount of growth and a low payout ratio, we think this bodes well for Travelers Companies' prospects of growing its dividend payments in the future.

Travelers Companies Looks Like A Great Dividend Stock

In summary, it is always positive to see the dividend being increased, and we are particularly pleased with its overall sustainability. 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 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. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. Companies that are growing earnings tend to be the best dividend stocks over the long term. See what the 16 analysts we track are forecasting for Travelers Companies for free with public analyst estimates for the company. Is Travelers Companies not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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