A company can return capital to shareholders through share repurchases, dividend payouts, or a combination of both. A company that pays consistent dividends provides a regular source of income for long-term shareholders.
MetLife (MET) provides quarterly dividends to shareholders. After several years of flat dividends (74 cents per share on an annual basis), MetLife increased its payout in 2Q13, as well as in the same quarter of 2014. The company hiked it to per-share dividends to 35 cents per quarter from 2Q14. In the past few quarters, MetLife’s dividend payout ratio ranged between 20–35% of its earnings.
The dividend yield of a company is its annual dividend per share divided by its share price. Dividend yield could be used to compare companies that pay regular dividends to shareholders. However, while comparing dividend yields, an investor should focus on the fundamentals of a company.
Among its peers, MetLife figures among the players on the higher side in terms of dividend yield, after Prudential Financial (PRU), Unam (UNAM), and Principal Financial (PFG), and ahead of Manulife (MFC) and Aflac (AFL). MetLife’s shares have become increasingly attractive in terms of dividend yield, impacted by both the increase in the dividend payout by MetLife and the drop in the share price of the company, despite strong fundamental characteristics.
In the next section, we will look at MetLife’s price performance and valuations. Investors can gain exposure in insurance companies by investing in financial sector ETFs, like the Financial Select Sector SPDR ETF (XLF).