Is The Progressive Corporation (NYSE:PGR) A Great Dividend Stock?

A sizeable part of portfolio returns can be produced by dividend stocks due to their contribution to compounding returns in the long run. The Progressive Corporation (NYSE:PGR) has returned to shareholders over the past 10 years, an average dividend yield of 1.00% annually. Should it have a place in your portfolio? Let’s take a look at Progressive in more detail. View our latest analysis for Progressive

5 checks you should do on a dividend stock

When researching a dividend stock, I always follow the following screening criteria:

• Is their annual yield among the top 25% of dividend payers?

• Has it consistently paid a stable dividend without missing a payment or drastically cutting payout?

• Has dividend per share amount increased over the past?

• Does earnings amply cover its dividend payments?

• Will it have the ability to keep paying its dividends going forward?

NYSE:PGR Historical Dividend Yield Jun 5th 18

How does Progressive fare?

Progressive has a trailing twelve-month payout ratio of 34.69%, which means that the dividend is covered by earnings. However, going forward, analysts expect PGR’s payout to fall to 30.61% of its earnings, which leads to a dividend yield of around 1.96%. However, EPS should increase to $4.05, meaning that the lower payout ratio does not necessarily implicate a lower dividend payment. If there’s one type of stock you want to be reliable, it’s dividend stocks and their stable income-generating ability. Although PGR’s per share payments have increased in the past 10 years, it has not been a completely smooth ride. Shareholders would have seen a few years of reduced payments in this time. Compared to its peers, Progressive produces a yield of 1.79%, which is on the low-side for Insurance stocks.

Next Steps:

With this in mind, I definitely rank Progressive as a strong dividend stock, and makes it worth further research for anyone who likes steady income generation from their portfolio. Given that this is purely a dividend analysis, I urge potential investors to try and get a good understanding of the underlying business and its fundamentals before deciding on an investment. There are three relevant factors you should further research:

1. Future Outlook: What are well-informed industry analysts predicting for PGR’s future growth? Take a look at our free research report of analyst consensus for PGR’s outlook.

2. Valuation: What is PGR worth today? Even if the stock is a cash cow, it’s not worth an infinite price. The intrinsic value infographic in our free research report helps visualize whether PGR is currently mispriced by the market.

3. Other Dividend Rockstars: Are there better dividend payers with stronger fundamentals out there? Check out our free list of these great stocks here.

To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned.