Assurant: A Reliable Dividend Play in the Finance Sector
Investors dream of getting big returns from their financial portfolios, whether through stocks, bonds, ETFs, other securities, or a combination of all. However, for income investors, their primary focus is generating consistent cash flow from their liquid investments. While cash flow can come from bond interest or interest from other types of investments, income investors tend to focus on dividends. A dividend is a distribution of a company’s earnings paid out to shareholders, and investors often view it by its dividend yield, a metric that measures the dividend as a percentage of the current stock price. Many academic studies show that dividends account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.
Assurant in Focus
Assurant (AIZ) is a New York-based insurer in the Finance sector. Shares have seen a price change of 4.7% so far this year. The company is currently shelling out a dividend of $0.7 per share, with a dividend yield of 2.14%. This compares with the Insurance – Multi line industry’s yield of 2.27% and the S&P 500’s yield of 1.74%.
In terms of dividend growth, the company’s current annualized dividend of $2.80 is up 2.2% from last year. Over the last five years, Assurant has increased its dividend five times on a year-over-year basis for an average annual increase of 4.55%. Looking ahead, future dividend growth will be dependent on earnings growth and payout ratio, which is the proportion of a company’s annual earnings per share that it pays out as a dividend. Assurant’s current payout ratio is 26%. This means it paid out 26% of its trailing 12-month EPS as dividend.
Assurant is also expecting earnings expansion this fiscal year. The Zacks Consensus Estimate for 2023 is $13.91 per share, representing a year-over-year earnings growth rate of 24.98%.
Why Investors Like Dividends
Dividends offer a variety of benefits for investors, including greatly improving stock investing profits, reducing overall portfolio risk, and providing tax advantages. However, not every company offers a quarterly payout. For instance, it’s a rare occurrence when a tech start-up or big growth business offers their shareholders a dividend. It’s more common to see larger companies with more established profits give out dividends. During periods of rising interest rates, income investors must be mindful that high-yielding stocks tend to struggle. That said, they can take comfort from the fact that Assurant is not only an attractive dividend play but also a compelling investment opportunity with a Zacks Rank of #2 (Buy).
Bottom Line
Assurant is a reliable dividend play in the Finance sector. The company has a consistent history of increasing its dividend on a year-over-year basis, with future growth dependent on earnings growth and payout ratio. Investors can take comfort in the fact that Assurant is not just an attractive dividend play but also a compelling investment opportunity with a Zacks Rank of #2 (Buy).
Conclusion
Assurant is a New York-based insurer in the Finance sector that offers a consistent dividend payout. The company has a payout ratio of 26% and has increased its dividend five times over the last five years. Investors who are income-focused can consider Assurant as a reliable dividend play with a Zacks Rank of #2 (Buy). Although high-yielding stocks tend to struggle during rising interest rates, Assurant could be a compelling investment opportunity for long-term investors.