Prudential Financial Offers Nine Years of Consecutive Annual Dividend Hikes (PRU)
By: Ned Piplovic,
The company started distributing dividends in December 2002 after incorporating and listing its shares on the New York Stock Exchange in December 2001. In addition to the current streak of nine consecutive annual dividend hikes, the company has provided its shareholders with 15 dividend hikes since initiating dividend payouts 16 years ago, or nearly 94% of the time.
While the company’s dividend distributions continue to advance, the company’s share price reversed direction and deviated from its long-term uptrend that started in 2009 after the financial crisis. After a 23% decline since late January 2018, the share price has embarked on a short-term uptrend and gained 9% since late June 2018. A continuation of the current uptrend would make the current share price drop an opportunity to add Prudential’s shares at discounted prices and collect outsized dividend income while the share price potentially returns to its long-term uptrend.
Investors convinced that the share price might bounce back should do their research and take a position prior to the company’s next ex-dividend date on August 20, 2018, and make sure to be eligible for the next round of dividend distributions on the September 13, 2018, pay date.
Prudential Financial, Inc. (NYSE:PRU)
Headquartered in Newark, New Jersey, and founded in 1875, Prudential Financial, Inc. provides insurance, investment management and other financial products and services. The firm operates through three business divisions. The U.S. Retirement Solutions & Investment Management division offers individual variable and fixed annuity products primarily to the U.S. mass affluent market and administrative services for retirement plans. The U.S. Individual Life & Group Insurance division conducts its business through two segments. The Individual Life segment offers individual variable life, term life and universal life insurance products. Additionally, the Group Insurance segment manufactures and distributes a full range of group life, long-term and short-term group disability insurance products primarily to institutional clients in the United States for use in connection with employee and membership benefits plans. Lastly, the International Insurance division provides individual life insurance, retirement and related products in foreign countries through its Life Planner, Life Consultants and Gibraltar Life operations, as well as banks and independent agencies.
The share price gained almost 12% between the start of the trailing 12-month period and its 52-week high of $126.02 on January 26, 2018. However, the share price was caught up in the overall market pullback and dropped 18% in the two weeks following the late January peak. Unfortunately, the decline did not end there. The share price declined another 10% towards its 52-week low of 93.22 on June 27 for a total loss of 26% from the January peak level. After bottoming out in late June 2018, the share price rose to close on August 9, 2018, at $101.52. While still almost 4% lower than it was one year earlier and almost 20% below the January peak level, this closing price was almost 9% above the June low and almost 30% higher than it was five years ago.
The current $0.90 quarterly dividend is 20% higher than the $0.75 payout from the same quarter last year. This new quarterly payout corresponds to a $3.60 annualized distribution and yields 3.5%, which is 26.6% higher than the company’s 2.8% five-year average yield.
Additionally, the current yield is 18% higher than the 3% average yield of the entire Financials sector and almost double the 1.84% simple average yield of the Life Insurance industry segment. Even compared to the 2.56% average yield of the segment’s dividend-paying companies, Prudential’s current yield is still almost 40% higher.
Over the past nine years of consecutive dividend hikes, the company has enhanced its total annual dividend amount more than 550% for an average growth rate of nearly 21% per year. Even with a 50% dividend cut in 2008, the company advanced its total annual distribution almost 10-fold since initiating dividend payouts in 2002, which is equivalent to an average annual growth rate of more than 15% over the past 16 years.
The current share price decline resulted in a total loss of more than 5% over the past 12 months. However, the company’s total return of 23% over the past three years and 42% over the past five years are much more indicative of the company’s long-term financial performance.
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Ned Piplovic is the assistant editor of website content at Eagle Financial Publications. He graduated from Columbia University with a Bachelor’s degree in Economics and Philosophy. Prior to joining Eagle, Ned spent 15 years in corporate operations and financial management. Ned writes for www.DividendInvestor.com and www.StockInvestor.com.