For dividend-paying companies, maintaining dividend growth is an essential way to demonstrate to investors that a firm is stable and enjoys long-term profitability. Dividend growth is also attractive to investors because it means an increasing passive income stream through stock ownership. Some investors also subscribe to the belief that dividend growth is an important factor in determining a company's stock price, as in the case of the dividend discount model.
Investors seeking to capitalize on dividend growth might seek out a targeted ETF like the ProShares S&P 500 Dividend Aristocrats ETF (BATS: NOBL), which tracks S&P constituents that have steadily increased dividend payouts for at least 25 years.
CI: Significant Dividend Growth and Signs of Being Undervalued
The Cigna Group (NYSE: CI) is a health services and insurance business that currently has an annualized dividend payout of $5.60. Though its dividend yield is just 1.65%, considered below ideal by many dividend investors, its dividend growth rate is sky-high. The company enjoys an annualized 3-year dividend growth rate of nearly 400%.
Beyond this significant dividend growth, CI presents a sustainable dividend payout ratio of just under 46%, meaning that its earnings comfortably cover its dividend payouts.
Analysts widely see Cigna shares as undervalued, as the company's stock has upside potential of almost 16% based ...
