Reinsurance Group of America (NYSE:RGA) to Pay Higher Dividend Than Last Year, $0.89

Management America Reinsurance Group, Incorporated (NYSE:RGA) announced it will pay a $0.89 dividend on August 27, which is an increase compared to last year’s comparable dividend. Based on this payout, the company’s dividend yield will be 1.8%, which is fairly typical for the industry.

Check out our latest analysis for Reinsurance Group of America

Reinsurance Group of America’s dividend is well covered by earnings

We would like to see a healthy dividend yield, but that is only helpful to us if the payout can continue. However, Reinsurance Group of America’s earnings easily cover the dividend. As a result, much of what it earned was reinvested in the business.

Looking ahead, earnings per share are forecast to grow by 92.4% over the next year. If the dividend continues on this path, the payout ratio could reach 15% next year, which we believe could be quite stable going forward.

Reinsurance Group of America has a solid history

Even over its long history of paying dividends, the company’s distributions have been remarkably stable. Since 2014, the dividend has increased from $1.20 per year to $3.56. That means the company has increased its distributions at an annual rate of about 11% during that period. Rapidly growing dividends over a long period of time are a very valuable feature of income stocks.

Dividend growth may be difficult to achieve

Investors who have held shares in the company over the past few years will be pleased with the dividend income they have received. Unfortunately, Reinsurance Group of America’s earnings per share have been essentially flat over the past five years, meaning the dividend may not be increased each year. While the increase may be modest, Reinsurance Group of America could always pay out a larger portion of its earnings to increase shareholder returns.

We really like Reinsurance Group of America’s dividend

Generally speaking, dividend growth is always good and we think Reinsurance Group of America is a strong income company thanks to its history and growing earnings. Distributions are fairly easily covered by earnings, which are also converted to cash flow. With all that said, it looks like it could be a good dividend opportunity.

Market movements are a testament to how highly valued a steady dividend policy is over one that is more unpredictable. Still, investors need to consider many other factors besides dividend payouts when analyzing a company. Earnings growth typically bodes well for the future value of a company’s dividend payments. See if the 10 Reinsurance Group of America analysts we track are forecasting continued growth with our free report on analyst estimates for the company. Isn’t Reinsurance Group of America the opportunity you’ve been looking for? Why don’t you check out our Selection of the best dividend stocks.

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This Simply Wall St article is for general information purposes only. Our commentary is based solely on historical data and analyst forecasts, and is based on an objective methodology. Our articles are not intended to be financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or your financial situation. Our goal is to provide you with long-term, focused analysis based on fundamental data. Please note that our analysis may not reflect the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.