Last update on 2024-06-27

MetLife (MET) - Dividend Analysis (Final Score: 6/8)

MetLife (MET) Dividend Analysis: Performance and stability assessment using an 8-criteria scoring system. Final score: 6 out of 8.

Short Analysis - Dividend Score: 6

We're running MetLife (MET) against the 8-criteria scoring system to evaluate the performance and stability of a company's dividend policy.

The analysis of MetLife's (MET) dividend policy was performed using an 8-criteria scoring system. MET received a dividend score of 6. Here are key takeaways: 1. MET's dividend yield is significantly higher than the industry average, historically providing attractive returns. 2. The average annual growth rate of dividends has been erratic, with periods of high increases but also some years with no payouts. 3. The payout ratio remains below 65%, indicating financial health. 4. Generally, dividends are well covered by earnings, though some volatility was noted. 5. Coverage by cash flow has seen improvement over the years. 6. Dividend payments have been stable with an upward trend over 20 years. 7. MET has paid dividends for 23 years, nearing the 25-year benchmark. 8. Consistent stock repurchases demonstrate financial confidence.

Insights for Value Investors Seeking Stable Income

MetLife (MET) shows a strong potential for investors interested in dividends, especially given its high yield and stable dividend history. However, some inconsistencies in dividend growth and earnings coverage pose risks. Overall, MET is worth considering if you prioritize stable and significant dividend income but keep an eye on its growth consistency and earnings volatility.

For those who are interested in delving deeper into the specifics, the subsequent section provides a comprehensive exploration of the criteria.

Dividend Yield Higher than the Industry Average?

Dividend yield is an essential metric that measures the annual dividend payment to shareholders as a percentage of the stock's price. A higher dividend yield indicates that a company is generating sufficient returns to share profits with its shareholders. It is particularly important for income-focused investors.

MetLife's current dividend yield of 3.1151% is substantially higher than the industry average of 1.73%. Historically, MetLife has generally offered a higher yield, with significant peaks during 2008 (2.1228%) and 2018 (4.0429%), compared to the industry peaks of 2.5% in 2008 and 2.03% in 2018. This shows that MetLife consistently generates attractive returns for its shareholders. The company's yield performance has also improved in recent years with a 2023 yield of 3.1151%, compared to just 0.6831% in 2003. This is a positive trend and indicates a strong capability for dividend payouts, making MetLife a compelling choice for dividend-focused investors.

Average annual Growth Rate higher than 5% in the last 20 years?

Criterion for evaluating MetLife's dividend growth rate over a 20-year period, comparing annual dividend increases to a 5% benchmark.

From 2003 to 2023, the dividend per share ratio for MetLife shows a tumultuous pattern with considerable variability. The most significant nominal increases in dividends per share ratio happened in 2004 (100.005%), 2007 (25.426%), and the negative in 2008 to 2011 where no dividends were paid, then another substantial increase was in 2013 (36.480%). More recently, the growth rates have been modest or negative with values around 4.2105% in 2022 and 4.0404% in 2023. While MetLife had some years of very high dividend growth surpassing the 5% threshold, the inconsistency and several years of 0% dividends raise concerns about the sustainability of their dividend policy. Overall, despite periods of high growth, the erratic dividends and years of no payout mean that while MetLife's dividend growth rate is favorable in some years, their historical inconsistency trend is moderately bad in terms of stable long-term growth against the 5% benchmark.

Average annual Payout Ratio lower than 65% in the last 20 years?

The average payout ratio is crucial as it indicates the proportion of earnings a company is distributing as dividends. A consistent payout ratio below 65% generally suggests that the company is in a healthy financial position to cover dividends, invest in growth, and withstand economic downturns.

Analyzing MetLife's 20-year payout ratio history, the company's average stands at approximately 32%, well below the 65% benchmark. This is a favorable trend, suggesting a disciplined approach to dividend payments and financial robustness. Years like 2009 and 2017 with negative or exceptionally high payout ratios reflect extraordinary circumstances impacting profitability and payout decisions. Overall, MetLife's ability to maintain an average payout significantly below the industry threshold demonstrates its capacity for stable dividend payouts while ensuring resources for future growth and financial stability.

Dividends Well Covered by Earnings?

An important criterion in assessing dividend sustainability is whether dividends are adequately covered by the earnings, often measured by the Dividend Payout Ratio (DPR). A lower DPR suggests a company retains more of its earnings and is better prepared to distribute consistent or growing dividends.

An analysis of MetLife's Earnings per Share (EPS) and Dividends per Share (DPS) culturalizes the sustainability of its dividend payments. Based on data from 2003 to 2023, the DPS values gradually increase, while EPS showcases significant volatility, including negative figures in 2009. The DPS/EPS ratio ideally falls below 0.6 for conservative companies. Most years demonstrate a sustainable trend except for alarming levels in 2009 and particularly in 2016, showing a payout ratio exceeding 1 due to low EPS figures. This irregularity was caused by sizable one-time charges or income write-offs. Reviewing more recent data from 2016 onward, the payout ratios stabilize within a healthier range (0.24-0.98). Such an overall acceptable DPR indicates MetLife prioritizes maintaining reciprocal dividends while balancing retention of earnings. Although encountering fluctuations, MetLife's progressively adjusted dividends amid improving earnings underscore their commitment to shareholder wealth, illustrating a generally positive dividend coverage norm.

Dividends Well Covered by Cash Flow?

A company's ability to cover dividends with its free cash flow is crucial because it indicates financial health and sustainability. Consistently well-covered dividends imply that the company generates sufficient cash to meet its dividend commitments without compromising its operational needs.

MetLife's (MET) free cash flow has exhibited significant variability from 2003 to 2023, with peaks and troughs that reflect broader macroeconomic conditions and internal operational efficiencies. For instance, the free cash flow surged to $17.16 billion in 2012 and then slightly declined but remained substantial in the years following, stabilizing around $13 to $16 billion more recently. Meanwhile, dividend payouts have also experienced marked changes, notably spiking in 2017 to $4.613 billion before returning to a more stabilized range just under $2 billion in subsequent years. Analyzing the ratio of dividends covered by cash flow, we notice considerable fluctuations, ranging from a low of 0.024 in 2003 to a peak of 0.571 in 2007. The latter suggests that in some years, dividends were comfortably covered by cash flow, while in others, particularly earlier years, the coverage was minimal — indicating higher risk. However, in more recent years, the ratio seems to stabilize around 0.12 to 0.15, such as 0.15 in 2023, which still reflects a conservative approach to dividend payouts relative to cash flow but also highlights improvements in financial management. Therefore, overall, while the free cash flow coverage of dividends has been uneven historically, recent trends are edging towards stability and suggest a cautiously optimistic outlook for dividend sustainability.

Stable Dividends Since the Company Began Paying Dividends?

Stability in dividend payments, where the dividend per share did not drop by more than 20% over the past two decades, is of utmost importance for income-seeking investors.

Over the past 20 years, MetLife (MET) has exhibited a robust record of stable dividend payments. Starting from a dividend per share of $0.205 in 2003, MetLife's dividends have grown consistently, reaching $2.06 per share by 2023. The data clearly indicates an upward trend in dividends without any sharp declines or reductions exceeding 20% in any given year. This stability is particularly beneficial for income-focused investors who prioritize reliable and growing dividend income streams to meet their financial goals. Thus, based on this consistent and upward trend, MetLife’s dividend policy is deemed favorable for investors seeking stable and predictable returns, reflecting a strong financial position and management's commitment to returning value to shareholders.

Dividends Paid for Over 25 Years?

Evaluating if a company has paid dividends for over 25 years helps assess its consistency in providing shareholder returns and implies a potentially sustainable and reliable business model.

MetLife (MET) has been paying dividends since the year 2000, making it 23 years since it started. This does not meet the 25-year criterion, but it shows a progressive trend in dividend payouts. Considering MET increased its dividends from $0.1782 per share in 2000 to $2.06 per share in the recent period, it reflects a significant positive growth of almost 1065%. Though the company hasn't met the 25-year mark yet, its consistent and increasing payments are indicative of a commitment to buyers' value and a steadily growing business. This trend is viewed positively for investors as it suggests that MET is likely to maintain or even increase dividends in the future. Nevertheless, they should monitor MET’s ability to sustain such growth beyond the 25-year objective.

Reliable Stock Repurchases Over the Past 20 Years?

The criterion examines the consistency and magnitude of a company's stock repurchase program, which can signal management's confidence in the company's future prospects and an efficient use of capital.

Over the past 20 years, MetLife (MET) has shown a notable trend in stock repurchases. Starting in 2005, the company began reducing its number of shares, with significant decreases observed yearly in 2007, 2008, 2015, 2016, and from 2018 to 2023. Notably, the average repurchase rate stands at 21.74%. This indicates a relatively consistent effort by MetLife to buy back shares, suggesting management's confidence in the underlying business and an efficient capital allocation strategy. The trend is particularly strong in recent years, reinforcing a positive outlook.