Yahoo Finance Erie Indemnity Co's Dividend Analysis
Assessing the Sustainability of Erie Indemnity Co's Dividends
Erie Indemnity Co (NASDAQ:ERIE) recently announced a dividend of $1.28 per share, payable on 2024-04-23, with the ex-dividend date set for 2024-04-08. As investors look forward to this upcoming payment, the spotlight also shines on the company's dividend history, yield, and growth rates. Using the data from GuruFocus, let's look into Erie Indemnity Co's dividend performance and assess its sustainability.
What Does Erie Indemnity Co Do?
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Erie Indemnity Co mainly performs services on behalf of the Erie Insurance Exchange relating to sales, underwriting, and issuance of policies. Erie Indemnity's results are tied to the performance of the Insurance Exchange, which principally provides automobile and homeowners insurance for individuals, along with multiperil, workers' compensation, and commercial automobile insurance for its commercial clients. Erie Indemnity's management fee is typically 25% of the Exchange's premiums, and this accounts for all of Erie Indemnity's revenue. The company operates exclusively in the United States.
A Glimpse at Erie Indemnity Co's Dividend History
Erie Indemnity Co has maintained a consistent dividend payment record since 1995, distributing dividends on a quarterly basis. The company has increased its dividend each year since then, earning the status of a dividend aristocrata title reserved for companies with at least 29 consecutive years of dividend increases. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Erie Indemnity Co's Dividend Yield and Growth
As of today, Erie Indemnity Co currently has a 12-month trailing dividend yield of 1.21% and a forward dividend yield of 1.27%, indicating anticipated dividend growth over the next year. However, the current yield is near a 10-year low and underperforms 87.31% of global competitors in the Insurance industry, which may not entice income-focused investors.
Over the past three years, Erie Indemnity Co's annual dividend growth rate was 7.20%, a figure that remained consistent over a five-year period and over the past decade. This steady growth results in a 5-year yield on cost of approximately 1.71% for Erie Indemnity Co stock as of today.
The Sustainability Question: Payout Ratio and Profitability
To evaluate the sustainability of Erie Indemnity Co's dividends, one must consider the dividend payout ratio. With a ratio of 0.57 as of 2023-12-31, Erie Indemnity retains a significant portion of earnings, suggesting funds are available for future growth and downturns. Additionally, Erie Indemnity's profitability rank of 8 out of 10, coupled with a decade of positive net income, underlines its robust profitability.
Growth Metrics: The Future Outlook
Erie Indemnity Co's favorable growth rank of 8 out of 10 suggests a strong growth trajectory. The company's average annual revenue increase of 12.90% outperforms 72.94% of global competitors, while its 3-year EPS growth rate of 15.00% outperforms 60.2% of global competitors. Furthermore, Erie Indemnity's 5-year EBITDA growth rate of 5.90% outperforms 48.49% of global competitors, indicating a solid foundation for sustaining dividends.
Next Steps
For value investors, Erie Indemnity Co's consistent dividend growth, moderate payout ratio, and strong profitability and growth metrics paint a picture of a reliable dividend payer with room for future expansion. As investors consider the upcoming dividend payment, these factors should be weighed to understand Erie Indemnity Co's potential as a long-term investment. Those seeking high-dividend yield stocks can further explore options with the High Dividend Yield Screener available to GuruFocus Premium users.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
This article first appeared on GuruFocus.
