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Principal Financial Group (NASDAQ:PFG) Is Increasing Its Dividend To $0.71

Principal Financial Group, Inc.’s (NASDAQ:PFG) dividend will be increasing to $0.71 on June 27th, up from last year’s payment for the same period. This brings the dividend yield to 3.4%, which is higher than the industry average.

Prior to this announcement, Principal Financial Group’s dividend was well covered by both cash flow and earnings, indicating that a significant portion of earnings are being reinvested back into the business for growth. Looking ahead, earnings per share are expected to increase by 72.6% in the next year. Assuming the dividend continues to follow recent trends, the payout ratio could reach 31% next year, which is considered sustainable.

Over the past decade, Principal Financial Group has maintained stable dividend distributions. The annual payment was $1.04 in 2014 and reached $2.84 in the most recent fiscal year, showing a growth rate of 11% per year. Consistent and growing dividends over a long period are attractive qualities for income investors.

However, despite its strong dividend history, Principal Financial Group may face challenges in growing the dividend further. Earnings per share have remained flat over the past five years, suggesting that annual dividend increases may not be guaranteed.

In summary, while the company has managed to raise its dividend and keep it within a sustainable range, shrinking earnings could pose challenges in maintaining the dividend growth in the future. Investors should consider various factors beyond dividends when evaluating a company. It’s important to note that this article provides general commentary based on historical data and analyst forecasts, and does not constitute financial advice.

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