The start of September was marked by an announcement by Safety Insurance Group, Inc. (NASDAQ:SAFT) about plans to trade ex-dividend in the following 4 days. Ex-dividend means that if you invest in SAFT stock on or after the 30th of August, you will not receive this dividend, which will be paid on the 13th of September.
The announced dividend for the Safety Insurance Stock is US$0.90 a share, followed on from the last 12 months, when the company distributed a total of US$3.60 per share to shareholders. Based on the performance and profits of Safety Insurance Group over the past one year, the SAFT stock price has a trailing yield of 3.8% on the current price of $93.76. If you invest in SAFT stock for its dividend, there are clear indications that Safety Insurance Group’s dividend is reliable and sustainable.
There are several benefits of investing in dividend stocks like the Safety Insurance Group stock. Dividend stocks an attractive investment is the fact that they are typically paid from company earnings. And a company with an excellent balance sheet and solid track record like Safety Insurance Group is a good pick. Typically, if a company pays more in dividends than it earned in profit, then the dividend could be unsustainable. In the case of Safety Insurance Group, the company is paying out a modest 47% of its earnings, which is good.
The lower dividend paid out on Safety Insurance Group stocks means they are a good vehicle to generate sustainable earnings. Based on future company performance, there is a possibility that Safety Insurance Group can lift the dividend when earnings are rising. When exploring the historic performance of the company, Safety Insurance Group’s earnings per share have risen 11% per annum over the last five years.
Readers looking to invest in SAFT stock would find the company’s stable performance and consistent earning reassuring. The fact that Safety Insurance Group is retaining a majority of the profits within the business is a sign that reinvesting earnings creates more value than paying dividends to shareholders. Perhaps even more importantly – this can sometimes signal management is focused on the long term future of the business. This is an attractive combination, and one that would certainly have an impact on the SAFT stock price down the line.
Following a good quarter for Safety Insurance Group, the company continues to show prior-year favorable development, evidence of its conservative underwriting culture. Its underwriting record is undeniably excellent, which is the result of a conservative approach to underwriting and a consistent customer base. For people looking to expand their portfolio, the Safety Insurance Group stock is worth looking into. Despite being a slow-growing insurance company, it generated nearly triple the net income of a year ago.
The dividends holders of the Safety Insurance Stock receive are higher than the bottom 25% of dividend payers in United States of America (1.48%). In addition to that, the dividends per share have been stable and have even increased in the past 10 years.