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Why American International Group (AIG) is a Top Dividend Stock for Your Portfolio
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Getting big returns from financial portfolios, whether through stocks, bonds, ETFs, other securities, or a combination of all, is an investor's dream. But when you're an income investor, your primary focus is generating consistent cash flow from each of your liquid investments.
While cash flow can come from bond interest or interest from other types of investments, income investors hone in on dividends. A dividend is that coveted 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 percent of the current stock price. Many academic studies show that dividends make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.
American International Group in Focus
Based in New York, American International Group (AIG - Free Report) is in the Finance sector, and so far this year, shares have seen a price change of -8.38%. The insurer is currently shelling out a dividend of $0.36 per share, with a dividend yield of 2.49%. This compares to the Insurance - Multi line industry's yield of 2.35% and the S&P 500's yield of 1.65%.
Looking at dividend growth, the company's current annualized dividend of $1.44 is up 12.5% from last year. In the past five-year period, American International Group has increased its dividend 1 times on a year-over-year basis for an average annual increase of 0.68%. 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. Right now, American International Group's payout ratio is 26%, which means it paid out 26% of its trailing 12-month EPS as dividend.
AIG is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2023 is $6.50 per share, which represents a year-over-year growth rate of 42.86%.
Bottom Line
Investors like dividends for many reasons; they greatly improve stock investing profits, decrease overall portfolio risk, and carry tax advantages, among others. However, not all companies offer a quarterly payout.
Big, established firms that have more secure profits are often seen as the best dividend options, but it's fairly uncommon to see high-growth businesses or tech start-ups offer their stockholders a dividend. Income investors have to be mindful of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. With that in mind, AIG is a compelling investment opportunity. Not only is it a strong dividend play, but the stock currently sits at a Zacks Rank of 3 (Hold).
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Why American International Group (AIG) is a Top Dividend Stock for Your Portfolio
Getting big returns from financial portfolios, whether through stocks, bonds, ETFs, other securities, or a combination of all, is an investor's dream. But when you're an income investor, your primary focus is generating consistent cash flow from each of your liquid investments.
While cash flow can come from bond interest or interest from other types of investments, income investors hone in on dividends. A dividend is that coveted 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 percent of the current stock price. Many academic studies show that dividends make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.
American International Group in Focus
Based in New York, American International Group (AIG - Free Report) is in the Finance sector, and so far this year, shares have seen a price change of -8.38%. The insurer is currently shelling out a dividend of $0.36 per share, with a dividend yield of 2.49%. This compares to the Insurance - Multi line industry's yield of 2.35% and the S&P 500's yield of 1.65%.
Looking at dividend growth, the company's current annualized dividend of $1.44 is up 12.5% from last year. In the past five-year period, American International Group has increased its dividend 1 times on a year-over-year basis for an average annual increase of 0.68%. 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. Right now, American International Group's payout ratio is 26%, which means it paid out 26% of its trailing 12-month EPS as dividend.
AIG is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2023 is $6.50 per share, which represents a year-over-year growth rate of 42.86%.
Bottom Line
Investors like dividends for many reasons; they greatly improve stock investing profits, decrease overall portfolio risk, and carry tax advantages, among others. However, not all companies offer a quarterly payout.
Big, established firms that have more secure profits are often seen as the best dividend options, but it's fairly uncommon to see high-growth businesses or tech start-ups offer their stockholders a dividend. Income investors have to be mindful of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. With that in mind, AIG is a compelling investment opportunity. Not only is it a strong dividend play, but the stock currently sits at a Zacks Rank of 3 (Hold).