Corebridge Monetary (NYSE: CRBG) sells two of my least favourite monetary merchandise: life insurance coverage and annuities.
I’ve no drawback with time period life insurance coverage. Many households want it with a purpose to shield their family members. However different sorts of life insurance coverage which are arrange as investments are too pricey. I’ve written extensively in regards to the topic right here in Rich Retirement.
And in my e book You Don’t Have to Drive an Uber in Retirement, the chapter on annuities is titled “The Worst Funding You Can Make.”
So I’m no fan of those merchandise.
However annuities and life insurance coverage are money cows for the businesses that promote them.
Corebridge makes use of a few of that money to pay a $0.23 per share quarterly dividend, which comes out to a 3.8% yield. Final yr, the corporate additionally paid out an extra $1.78 in particular dividends.
Can it hold peddling its annuities and insurance coverage insurance policies laborious sufficient to take care of its quarterly dividend?
Corebridge wasn’t publicly traded till September 2022, so it doesn’t have a protracted monitor file, however we nonetheless have loads of information factors we will use.
Since Corebridge is an insurance coverage firm, we use internet funding revenue to measure money circulation. The corporate collects premiums and charges, invests the cash, makes payouts to clients when needed, and retains the distinction. That distinction is its internet funding revenue.
Wall Road doesn’t have any internet funding revenue estimates, however over the 12 months ending in September (outcomes from the fourth quarter of 2023 haven’t been launched but), the corporate’s internet funding revenue totaled $9.6 billion.
That’s up considerably from $8.8 billion within the 2022 calendar yr.
During the last 4 quarters, Corebridge paid out $1.1 billion in dividends, which was simply 12% of its internet funding revenue. Based mostly on these figures, the dividend could be very inexpensive.
Even when internet funding revenue have been to return in at zero for the fourth quarter, the full for 2023 would nonetheless be $7.3 billion – greater than sufficient to simply cowl the dividend.
The one factor Corebridge has going in opposition to it from a dividend perspective is that it doesn’t have a lot of a historical past, having been public for less than a yr and a half and having paid simply six quarterly dividends.
So the corporate can simply pay its present dividend, however we will’t fairly name the dividend a lock because it has such a restricted historical past.
Annuities are good enterprise even when they’re unhealthy for patrons. Actually, you’re higher off proudly owning the businesses that promote them fairly than proudly owning the annuities themselves.
Dividend Security Score: B
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