Some investors rely on dividends for growing their wealth, and if you're one of those dividend sleuths, you might be intrigued to know that Principal Financial Group, Inc. (NASDAQ:PFG) is about to go ex-dividend in just 4 days. The ex-dividend date occurs one day before the record date which is the day on which shareholders need to be on the company's books in order to receive a dividend. The ex-dividend date is an important date to be aware of as any purchase of the stock made on or after this date might mean a late settlement that doesn't show on the record date. Therefore, if you purchase Principal Financial Group's shares on or after the 30th of November, you won't be eligible to receive the dividend, when it is paid on the 20th of December.
The company's next dividend payment will be US$0.67 per share. Last year, in total, the company distributed US$2.68 to shareholders. Calculating the last year's worth of payments shows that Principal Financial Group has a trailing yield of 3.7% on the current share price of $72.65. If you buy this business for its dividend, you should have an idea of whether Principal Financial Group's dividend is reliable and sustainable. So we need to investigate whether Principal Financial Group can afford its dividend, and if the dividend could grow.
See our latest analysis for Principal Financial Group
Dividends are typically paid from company earnings. If a company pays more in dividends than it earned in profit, then the dividend could be unsustainable. Principal Financial Group paid out a comfortable 41% of its profit last year.
Companies that pay out less in dividends than they earn in profits generally have more sustainable dividends. The lower the payout ratio, the more wiggle room the business has before it could be forced to cut the dividend.
Click here to see the company's payout ratio, plus analyst estimates of its future dividends.
Have Earnings And Dividends Been Growing?
Businesses with shrinking earnings are tricky from a dividend perspective. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. So we're not too excited that Principal Financial Group's earnings are down 4.3% a year over the past five years.
Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Principal Financial Group has delivered 11% dividend growth per year on average over the past 10 years.
The Bottom Line
From a dividend perspective, should investors buy or avoid Principal Financial Group? Earnings per share have shrunk noticeably in recent years, although we like that the company has a low payout ratio. This could suggest a cut to the dividend may not be a major risk in the near future. We're unconvinced on the company's merits, and think there might be better opportunities out there.
If you want to look further into Principal Financial Group, it's worth knowing the risks this business faces. For example - Principal Financial Group has 1 warning sign we think you should be aware of.
A common investing mistake is buying the first interesting stock you see. Here you can find a full list of high-yield dividend stocks.
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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.
Four Days Left Until Principal Financial Group, Inc. (NASDAQ:PFG) Trades Ex-Dividend - Yahoo Finance
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