The Insurance Australia Group Ltd (ASX: IAG) share price isn't having a great start to the trading week. At the time of writing, IAG shares are down 0.74% to $5.39 a share.
This latest move comes after some turbulence with the IAG share price last week. This insurance giant released its full-year earnings report for the 2021 financial year last Wednesday, and investors seemed confused as to how to respond.
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A big week for IAG
Although IAG reported an increase in cash earnings, margins and its dividend, it also reported a $427 million net loss for the period (albeit due to a large one-off cost). Initially, investors sent IAG shares down more than 2% following the release. But in the days since, IAG shares have climbed back to where they stand today, rising close to 5% since last Wednesday (despite today's dip).
But let's dig a little deeper into the dividends that IAG is currently offering. After all, a big hike in the company's shareholder payouts was arguably the centrepiece of last week's earnings report.
So IAG's last dividend was paid out on 30 March 2021 – a 7-cents-per-share unfranked interim dividend. IAG did not pay a final dividend for 2020. Before that, the company paid out 2 dividends for 2019. The first was a final payment of 20 cents per share, partially franked at 70%, paid out on 30 September 2019. The second was a final dividend of 10 cents a share, also franked to 70%, paid out on 25 March 2020.
As it stands today, IAG has a trailing dividend yield of 3.71%. That number takes into account the final dividend of 13 cents per share, to be paid out on 22 September 2021, which IAG announced last week. If we annualise this most recent dividend, we get a potential forward yield of 4.83% on current pricing.
So how do these dividend yields compare to other companies in IAG's arena?
How does the IAG dividend compare to other ASX financials?
Well, as an insurance giant, IAG falls into the ASX financials sector. This sector is dominated by the big ASX banks. As it stands today, Commonwealth Bank of Australia (ASX: CBA) currently has a dividend yield of 3.41% on offer. Westpac Banking Corp (ASX: WBC) is offering 3.44%, while National Australia Bank Ltd. (ASX: NAB) is putting up 3.26%. Australia and New Zealand Banking GrpLtd (ASX: ANZ) tops the major banks with 3.65% on offer today.
As is evident, IAG pips all of these major banks with its current yield.
But what about the ASX financial shares outside the ASX banks? Well, let's look at some other insurance companies. QBE Insurance Group Ltd (ASX: QBE) will pay out an 11-cents-per-share dividend on 24 September. This comes after QBE skipped its last dividend (for the second half of 2020). That gives QBE a trailing yield of 0.88% on current pricing, and an annualised potential forward yield of 1.76%.
Another share we can compare to IAG is the fellow insurer and bank Suncorp Group Ltd (ASX: SUN). Suncorp currently has a dividend yield of 5.34%, based on the 48-cents-per-share (fully franked) payout it announced last week.
So IAG's current dividend yield is certainly towards the upper end of its ASX financials sector as it stands today. At IAG's current share price, the company has a market capitalisation of $13.28 billion.
