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Why Principal Financial (PFG) 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. However, when you're an income investor, your primary focus is generating consistent cash flow from each of your liquid investments.
Cash flow can come from bond interest, interest from other types of investments, and, of course, 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 account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.
Headquartered in Des Moines, Principal Financial (PFG - Free Report) is a Finance stock that has seen a price change of 29.2% so far this year. The financial services company is currently shelling out a dividend of $0.84 per share, with a dividend yield of 2.95%. This compares to the Insurance - Multi line industry's yield of 1.77% and the S&P 500's yield of 1.42%.
Looking at dividend growth, the company's current annualized dividend of $3.36 is up 9.1% from last year. Over the last 5 years, Principal Financial has increased its dividend 4 times on a year-over-year basis for an average annual increase of 5.97%. 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. Principal Financial's current payout ratio is 37%, meaning it paid out 37% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for PFG for this fiscal year. The Zacks Consensus Estimate for 2026 is $9.64 per share, representing a year-over-year earnings growth rate of 16.57%.
Investors like dividends for many reasons; they greatly improve stock investing profits, decrease overall portfolio risk, and carry tax advantages, among others. It's important to keep in mind that not all companies provide a quarterly payout.
For instance, it's a rare occurrence when a tech start-up or big growth business offers its shareholders a dividend. It's more common to see larger companies with more established profits give out dividends. During periods of rising interest rates, income investors must be mindful that high-yielding stocks tend to struggle. With that in mind, PFG presents a compelling investment opportunity; it's not only an attractive dividend play, but the stock also boasts a strong Zacks Rank of #2 (Buy).
View the Zacks #1 Rank List
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Why Principal Financial (PFG) 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. However, when you're an income investor, your primary focus is generating consistent cash flow from each of your liquid investments.
Cash flow can come from bond interest, interest from other types of investments, and, of course, 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 account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.
Headquartered in Des Moines, Principal Financial (PFG - Free Report) is a Finance stock that has seen a price change of 29.2% so far this year. The financial services company is currently shelling out a dividend of $0.84 per share, with a dividend yield of 2.95%. This compares to the Insurance - Multi line industry's yield of 1.77% and the S&P 500's yield of 1.42%.
Looking at dividend growth, the company's current annualized dividend of $3.36 is up 9.1% from last year. Over the last 5 years, Principal Financial has increased its dividend 4 times on a year-over-year basis for an average annual increase of 5.97%. 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. Principal Financial's current payout ratio is 37%, meaning it paid out 37% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for PFG for this fiscal year. The Zacks Consensus Estimate for 2026 is $9.64 per share, representing a year-over-year earnings growth rate of 16.57%.
Investors like dividends for many reasons; they greatly improve stock investing profits, decrease overall portfolio risk, and carry tax advantages, among others. It's important to keep in mind that not all companies provide a quarterly payout.
For instance, it's a rare occurrence when a tech start-up or big growth business offers its shareholders a dividend. It's more common to see larger companies with more established profits give out dividends. During periods of rising interest rates, income investors must be mindful that high-yielding stocks tend to struggle. With that in mind, PFG presents a compelling investment opportunity; it's not only an attractive dividend play, but the stock also boasts a strong Zacks Rank of #2 (Buy).