IAG's Dividend Boost: A Sweet Surprise for Shareholders

Insurance Australia Group (ASX:IAG) has just announced a dividend of A$0.12 per share, marking a 10% increase from the previous dividend of A$0.11 per share. This news is a sweet surprise for shareholders, as it reflects the company's strong financial performance and commitment to returning capital to investors. But how did we get here, and what does this mean for IAG's future?



A Look Back in Time
IAG started paying dividends in 2015, with an interim cash dividend of €0.10 per share. Since then, the company has consistently increased its dividends each year, with the final dividend in 2019 being €0.165 per share. In 2019, IAG also paid a special dividend of €0.35 per share, which was paid out of the share premium reserve and was not subject to withholding tax. However, as a result of the impact of COVID-19, IAG withdrew its proposal to pay a final dividend in April 2020. The Group is determined to resume returning capital to shareholders as soon as the operating environment and resulting financial performance of the Group permit.

The Road to Recovery
IAG's dividend policy is to pay a sustainable dividend that reflects the company's earnings and cash flow. The company aims to pay a dividend that is consistent with its earnings and cash flow, while also considering the needs of its business and the interests of its shareholders. IAG's strong financial performance in the 2021 financial year, with a net profit after tax (NPAT) of A$1.6 billion, allowed the company to distribute a higher dividend to shareholders.

What's Next for IAG?
IAG's dividend history and the current consensus forecasts suggest that the company's dividend yield could rise to almost 4% next year. This is above the current FTSE 100 average yield of 3.6%. The company's commitment to shareholder returns, combined with its strong financial performance, could contribute to a positive market performance, particularly for investors focused on income-generating stocks.



In conclusion, IAG's dividend boost is a welcome surprise for shareholders, reflecting the company's strong financial performance and commitment to returning capital to investors. As IAG continues to generate profits and return capital to shareholders, it could contribute to a positive market performance, particularly for investors focused on income-generating stocks. With a dividend yield expected to rise to almost 4% next year, IAG is a compelling choice for income-seeking investors.