MetLife Delivers Seven Consecutive Annual Dividend Hikes, Yield Outperforms Industry Averages (MET)
By: Ned Piplovic,
Since introducing quarterly dividend distributions in 2000, MetLife, Inc. (NYSE: MET) has managed to evade any dividend cuts and has delivered to its shareholders a streak of seven consecutive annual dividend hikes.
Unlike many of its peers that were forced to cut dividend distribution amounts or even eliminate dividends outright, MetLife managed to get through the aftermath of the 2008 financial crisis by pausing its annual dividend hikes for five years. After distributing a flat annual dividend payout from 2007 through 2012, MetLife resumed its annual dividend hikes in 2013 and has enhanced its annual payout every year since then.
The company’s current dividend payout ratio is just 33%. This payout ratio level indicates that MetLife currently uses only one-third of its earnings to cover the dividend distributions, which is sustainable over an extended time horizon. The current payout ratio is at the low end of the 30% to 50% ratio range that investors generally consider as sustainable. Even a significant payout increase would still keep the ratio well below the 50% upper limit where investors begin to speculate whether an equity will have to start considering dividend cuts.
In addition to these annual dividend hikes, MetLife offers a 3.5% dividend yield — which currently outperforms the sector and industry segment averages by more than 15% — as well as double-digit-percentage asset appreciation over the past 12 months. While close to the analysts’ average price target, the current share price still has a few percentage points room on the upside.
Any interested investors whose own detailed analysis confirm the bullish outlook of the MetLife stock should consider taking a long position before the upcoming ex-dividend date on August 3, 2019. All investors that can claim stock ownership prior to the ex-dividend date will secure eligibility to receive the next round of dividend distributions on the September 13, 2019, pay date.
MetLife, Inc. (NYSE:MET)
Headquartered in New York and founded in 1863, MetLife, Inc. engages in the insurance, annuities, employee benefits and asset management businesses. The company operates through five segments — United States, Asia, Europe, the Middle East and Africa, Latin America and MetLife Holdings. Through its business segments, the company offers life, dental, group short-term and long-term disability, individual disability, accidental death and dismemberment and other plans to employers. Additionally, MetLife provides pension risk transfers, institutional income annuities, tort settlements, capital markets investments and other insurance products and services. The company also offers automobile, homeowners and personal liability insurance, as well as small business property, liability and business interruption insurance products. Furthermore, MetLife provides fixed annuities and pension products, medical and credit insurance products, fixed and indexed-linked annuities, as well as protection against the costs of long-term health care services.
The share price entered the current one-year period riding a slow downtrend that began in January 2018. After experiencing a slightly higher level of volatility than over the past five years, the share price declined 16% before reaching its 52-week low of $38.24 on December 24, 2018. However, the share price reversed direction immediately and embarked on its current recovery trend.
With just one significant pullback in late-March, the share price gained nearly one-third of its value before reaching its 52-week high of $50.70 on July 5, 2019. After peaking in the first week of July, the share price pulled back 0.6% to close on July 9 at $50.38. This closing price was almost 11% higher than it was one year earlier, as well as 31.7% above the 52-week low from late-December 2018. However, the share price spent the last three years recovering from a two-year decline prior to that and managed only a marginal gain of 1% over the past five years.
MetLife boosted its quarterly dividend payout nearly 5% from the $0.42 distribution one year ago to the current $0.44 payout amount. This new quarterly distribution is equivalent to a $1.76 total annual payout and a forward dividend yield of 3.5%, which tracks the company’s own 3.51% average yield over the past five years.
While only even with its own average, the current MetLife yield outperformed the average industry yields by double- and triple-digit percentages. The current 3.5% yield is nearly 16% above the 3.02% simple average yield of the overall Financial sector. Furthermore, compared to the 1.3% average yield of the Life Insurance industry segment, the MetLife yield is nearly 170% higher. Disregarding the non-dividend equities, the average dividend yield rises to 2.12%. However, even compared to this average figure, the MetLife yield is still 65% higher than the average yield of the sector’s only dividend-paying companies.
Over the past seven consecutive annual hikes, the company has advanced its total annual payout amount nearly almost 140%. This level of advancement is equivalent to an average growth rate of 13.2% per year. Despite missing six consecutive annual dividend hikes from 2007 through 2012, MetLife still enhanced its annual dividend payout nearly nine-fold since beginning dividend distributions in 2000. This annual payout enhancement is equivalent to an average rate of 12.6% per year over the past 19 years.
The flat share price performance over the past five years limited the total returns on shareholder investment to just 17%. Basically, the entire gains over the past five years came from dividend distributions. However, the double-digit-percentage share price gains since last July combined with dividend income for a total return of more than 20% in the past year. Additionally, MetLife rewarded its shareholders with total returns of 60% in the past three years.
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