Corebridge Financial, Inc. (NYSE:CRBG) has announced that it will pay a dividend of $0.24 per share on the 30th of June. Based on this payment, the dividend yield on the company's stock will be 2.9%, which is an attractive boost to shareholder returns.
Corebridge Financial's Future Dividend Projections Appear Well Covered By Earnings
If the payments aren't sustainable, a high yield for a few years won't matter that much. Before this announcement, Corebridge Financial was paying out 79% of earnings, but a comparatively small 25% of free cash flows. In general, cash flows are more important than earnings, so we are comfortable that the dividend will be sustainable going forward, especially with so much cash left over for reinvestment.
According to analysts, EPS should be several times higher next year. If the dividend continues along recent trends, we estimate the payout ratio will be 14%, which would make us comfortable with the dividend's sustainability, despite the levels currently being elevated.
Check out our latest analysis for Corebridge Financial
Corebridge Financial Is Still Building Its Track Record
The company has maintained a consistent dividend for a few years now, but we would like to see a longer track record before relying on it. Since 2022, the dividend has gone from $0.92 total annually to $0.96. This works out to be a compound annual growth rate (CAGR) of approximately 1.4% a year over that time. We like that the dividend hasn't been shrinking. However we're conscious that the company hasn't got an overly long track record of dividend payments yet, which makes us wary of relying on its dividend income.
Corebridge Financial's Dividend Might Lack Growth
The company's investors will be pleased to have been receiving dividend income for some time. We are encouraged to see that Corebridge Financial has grown earnings per share at 74% per year over the past five years. However, Corebridge Financial isn't reinvesting a lot back into the business, so we wonder how quickly it will be able to grow in the future.
In Summary
Overall, it's nice to see a consistent dividend payment, but we think that longer term, the current level of payment might be unsustainable. In the past, the payments have been unstable, but over the short term the dividend could be reliable, with the company generating enough cash to cover it. We don't think Corebridge Financial is a great stock to add to your portfolio if income is your focus.
Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. For example, we've identified 3 warning signs for Corebridge Financial (1 can't be ignored!) that you should be aware of before investing. If you are a dividend investor, you might also want to look at our curated list of high yield dividend stocks.
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