Cincinnati Financial Corporation (NASDAQ: CINF) The stock will trade with no dividend in three days. The ex-dividend day is one day before the record date, the day on which shareholders must be on the company’s books to receive a dividend. The ex-dividend date is important because any transaction in a stock must be completed before the record date in order to be eligible for a dividend. Therefore, if you buy the shares of Cincinnati Financial on or after September 15th, you will not be eligible for the dividend if it is paid on October 15th.
The company’s upcoming dividend is $ 0.63 per share, after having paid out a total of $ 2.52 per share to shareholders over the past 12 months. Looking at dividends over the past 12 months, Cincinnati Financial has a trailing return of approximately 2.1% versus its current share price of $ 117.38. Dividends are an important source of income for many shareholders, but the health of the company is critical to sustaining those dividends. So we need to investigate whether Cincinnati Financial can afford its dividend and whether the dividend could go up.
Dividends are usually paid out of company profits. If a company pays more dividends than it generated in profit, the dividend cannot be sustainable. Cincinnati Financial only pays out 14% of its after-tax profits, which is comfortably low and leaves plenty of room for adverse events.
In general, the lower a company’s payout ratio, the more stable its dividend is.
NasdaqGS: CINF Historic Dividend September 11, 2021
Have profits and dividends grown?
Stocks of companies with sustained earnings growth often offer the best dividend prospects because as earnings increase, it is easier to increase the dividend. If earnings plummet enough, the company could be forced to cut its dividend. Because of this, it’s comforting to see Cincinnati Financial’s profits have skyrocketed 36% annually over the past five years.
Many investors will judge a company’s dividend performance by assessing how much dividend payments have changed over time. Since our data began 10 years ago, Cincinnati Financial has increased its dividend by an average of about 4.6% per year. Earnings per share grew much faster than the dividend, possibly because Cincinnati Financial is holding back more of its earnings to grow the business.
Should investors buy or avoid Cincinnati Financial from a dividend perspective? Companies like Cincinnati Financial, which are growing rapidly and paying out only a small fraction of their profits, typically invest heavily in their business. For the purposes of this analysis, this is one of the most attractive investment combinations as it can create significant value for investors over the long term. Cincinnati Financial ticks many boxes for us from a dividend perspective, and we believe that these are the traits that the company deserves further attention.
With this in mind, a critical part of doing a thorough stock analysis is being aware of the risks that stocks are currently exposed to. Our analysis shows 1 warning sign for Cincinnati Financial and you should be aware of this before buying any stocks.
A common investment mistake is buying the first interesting stock you see. Here you can find a list of promising dividend stocks with a yield greater than 2% and an upcoming dividend.
This article from Simply Wall St is of a general nature. We only provide comments based on historical data and analyst projections using an unbiased methodology, and our articles are not intended as financial advice. It is not a recommendation to buy or sell stocks and does not take into account your goals or your financial situation. Our goal is to provide you with long-term, focused analysis based on fundamentals. Note that our analysis may not take into account the latest company announcements or quality material, which may be sensitive to the price. Simply Wall St has no position in the stocks mentioned.
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