Dividend report card: Insurance Australia Group Ltd and AMP Limited | Motley Fool Australia: " Insurance Australia Group Ltd (ASX: IAG)is expected to deliver flat dividend growth over the next two financial years. This may appear disappointing for income-seeking investors, but in the long run IAG is positioning itself for strong growth, with the company also increasing its exposure to Asia. This appears to be a sound move, since it provides the company with not only improved growth opportunities, but added diversification, too.
With IAG’s integration of the business unit acquired from Wesfarmers also progressing well, it is forecast to increase its bottom line by 6.7% in the current financial year. This puts it on a forward price to earnings (P/E) ratio of just 13.8, which is below the ASX’s P/E ratio of 15.5. Furthermore, efficiency savings and synergies of $230m are set to be realised this year from the recent acquisition which, alongside a new digitisation strategy, mean that IAG looks set to deliver an improved income as well as capital gains over the medium to long term.
Clearly, neither IAG nor AMP has a strong long term track record of dividend growth. In fact, dividends per share have fallen by 4% and 9.1% respectively per annum over the last decade. However, with refreshed strategies, appealing valuations and high yields, they appear to be top notch income plays for the long term."
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