Exploring the Dividend Performance and Sustainability of CNA Financial Corp
CNA Financial Corp (NYSE:CNA) recently announced a dividend of $0.44 per share, payable on 2024-06-06, with the ex-dividend date set for 2024-05-17. As investors look forward to this upcoming payment, the spotlight also shines on the company’s dividend history, yield, and growth rates. Using the data from GuruFocus, let’s look into CNA Financial Corp’s dividend performance and assess its sustainability.
What Does CNA Financial Corp Do?
CNA Financial Corp is an insurance holding company that provides commercial property and casualty insurance. The company operates under five segments: Specialty, Commercial and International being its core business and two segments for its non-core businesses, which are Life and Group and Corporate and Other. CNA Financial Corp, through its segments, provides professional, financial, specialty property and casualty products to small businesses and medium scale organizations. It has its business spread across Continental Europe, United Kingdom, and Canada. The majority of the revenues are generated from the Specialty and Commercial segment of the business.
A Glimpse at CNA Financial Corp’s Dividend History
CNA Financial Corp has maintained a consistent dividend payment record since 2011. Dividends are currently distributed on a quarterly basis. CNA Financial Corp has increased its dividend each year since 2011. The stock is thus listed as a dividend achiever, an honor that is given to companies that have increased their dividend each year for at least the past 13 years. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down CNA Financial Corp’s Dividend Yield and Growth
As of today, CNA Financial Corp currently has a 12-month trailing dividend yield of 3.76% and a 12-month forward dividend yield of 3.90%. This suggests an expectation of increased dividend payments over the next 12 months. Over the past three years, CNA Financial Corp’s annual dividend growth rate was 4.30%. Extended to a five-year horizon, this rate increased to 5.00% per year. And over the past decade, CNA Financial Corp’s annual dividends per share growth rate stands at 7.40%.
Based on CNA Financial Corp’s dividend yield and five-year growth rate, the 5-year yield on cost of CNA Financial Corp stock as of today is approximately 4.80%.
The Sustainability Question: Payout Ratio and Profitability
To assess the sustainability of the dividend, one needs to evaluate the company’s payout ratio. The dividend payout ratio provides insights into the portion of earnings the company distributes as dividends. A lower ratio suggests that the company retains a significant part of its earnings, thereby ensuring the availability of funds for future growth and unexpected downturns. As of 2024-03-31, CNA Financial Corp’s dividend payout ratio is 0.37.
CNA Financial Corp’s profitability rank, offers an understanding of the company’s earnings prowess relative to its peers. GuruFocus ranks CNA Financial Corp’s profitability 6 out of 10 as of 2024-03-31, suggesting fair profitability. The company has reported positive net income for each year over the past decade, further solidifying its high profitability.
Growth Metrics: The Future Outlook
To ensure the sustainability of dividends, a company must have robust growth metrics. CNA Financial Corp’s growth rank of 6 out of 10 suggests that the company has a fair growth outlook.
Revenue is the lifeblood of any company, and CNA Financial Corp’s revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. CNA Financial Corp’s revenue has increased by approximately 7.10% per year on average, a rate that underperforms approximately 50% of global competitors. The company’s 3-year EPS growth rate showcases its capability to grow its earnings, a critical component for sustaining dividends in the long run. During the past three years, CNA Financial Corp’s earnings increased by approximately 23.00% per year on average, a rate that underperforms approximately 30.77% of global competitors. Lastly, the company’s 5-year EBITDA growth rate of 4.90%, which underperforms approximately 56.38% of global competitors.
Next Steps
CNA Financial Corp’s consistent dividend increases, coupled with a robust payout ratio and fair profitability, suggest a sustainable dividend policy. However, the company’s growth metrics indicate some challenges ahead. Investors should monitor these growth indicators closely to gauge the potential impact on future dividends. For those looking to expand their portfolio with high-dividend yield stocks, GuruFocus Premium users can utilize the High Dividend Yield Screener.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
This article first appeared on GuruFocus.
