Dividend hunters should consider Zurich Insurance Group AG (VTX:ZURN), yielding 5.7%

If you’re an income investor, then Zurich Insurance Group AG (VTX:ZURN) should be on your radar. Zurich Insurance Group AG, together with its subsidiaries, provides insurance products and related services in Europe, North America, Latin America and the Asia-Pacific region. Over the past 10 years, the CHF46.8 billion market cap company has increased its dividend payments, from $12.25 to $17.87. With a current yield of 5.7%, let’s take a closer look at Zurich Insurance Group’s dividend profile.

View our latest analysis for Zurich Insurance Group

What is a dividend rock star?

This is a stock that pays a consistent, reliable and competitive dividend over a long period of time, and is expected to continue to do so in the same way for many years. More precisely:

• It pays an annual return higher than 75% of dividend payers

• It consistently pays dividends without missing a payment or significantly reducing the payment.

• Its dividend amount per share has increased over the past

• It can afford to pay current dividends from its profits.

• It is able to continue making payments at the current rate in the future.

High and reliable efficiency

Zurich Insurance Group currently yields 5.7%, which is high for insurance stocks. But the real reason why Zurich Insurance Group stands out is that it has a proven track record of consistently delivering this level of dividends, from profits, to shareholders and can be expected to continues to pay in the future. This is a highly desirable feature of stock ownership if you are an investor who wants to get significant cash flow from your portfolio over a long period of time.

If there’s one thing you want to be reliable about in your life, it’s dividend stocks and their consistent income stream. In ZURN’s case, its DPS has increased from $12.25 to $17.87 over the last 10 years. During this period, it has not missed a single payment, as you would expect for a company increasing its dividend. These are all positive signs of a great and reliable dividend stock.

The company currently pays out 84% of its profits as dividends, according to its trailing twelve month data, meaning the dividend is sufficiently covered by profits. In the near future, analysts expect the payout ratio to drop by 71%, which would result in a dividend yield of around 6.5%. However, EPS is expected to increase to $25.95, meaning the lower payout ratio does not necessarily imply a lower dividend payment.

When considering dividend sustainability, it’s also worth checking a company’s cash flow. Cash flow is important because companies with strong cash flow can generally maintain higher payout ratios.

Next steps:

While Zurich Insurance Group has generated significant dividend income for your portfolio over the past few years, you can take comfort in knowing that this stock will continue to be a top dividend generator in the future. However, since this is a dividend analysis only, I recommend taking adequate time to understand its core business and determine whether the company and its investment properties fit your overall goals. Below, I have compiled three important factors you should consider:

1. Future prospects: What do knowledgeable industry analysts predict for ZURN’s future growth? Take a look at our free analyst consensus research report for ZURN’s outlook.

2. Assessment: What is ZURN worth today? Even if the stock is a cash cow, it’s not worth an infinite price. The intrinsic value infographic in our free research report helps visualize whether ZURN’s price is currently mispriced by the market.

3. Other Dividend Rockstars: Are there strong dividend payers with better fundamentals? Check out our free list of these great titles here.

To help readers see beyond the short-term volatility of the financial market, we aim to bring you focused long-term research analysis based solely on fundamental data. Note that our analysis does not take into account the latest announcements from price-sensitive companies.

The author is an independent contributor and, at the time of publication, had no position in any stocks mentioned. For errors that require correction, please contact the editor at [email protected].