Lincoln National sets $0.45 quarterly dividend for Feb. 1 payment

By Grace Kim

$0.45 per share is the quarterly dividend Lincoln National Corporation (NYSE: LNC) scheduled for payment on Monday, February 1. Investors must be on the company’s books by Monday, January 11 to qualify.

Lincoln National declared the dividend on Tuesday, November 10. The payment annualizes at $1.80 per share and carries a 4.2% dividend yield. January 11 is also the ex-dividend date, when the shares trade without the pending dividend.

How is the dividend covered?

The $1.80 annualized amount produces a 4.2% dividend yield, meaning annual dividends relative to the share price. Lincoln National’s payout ratio—the proportion of earnings paid as dividends—was 23.3%, leaving the dividend sufficiently covered by earnings.

Equities analysts expect Lincoln National to earn $8.67 per share next year. At that forecast, the company should continue covering its $1.80 annual dividend, with an expected future payout ratio of 20.8%.

In short, current and forecast earnings both cover the annual payout with room to spare.

What did the latest quarter show?

$1.72 in quarterly earnings per share (EPS) fell short of the $1.96 analyst consensus by $0.24, according to results Lincoln National released on Thursday, November 5. The company reported the figure for its most recent quarterly earnings data.

Revenue of $5.06 billion exceeded the $4.97 billion consensus estimate. Lincoln National also posted a 17.02% return on equity (ROE), or profit relative to shareholders’ equity, and a 16.36% net margin, meaning profit as a share of revenue.

EPS stood at $2.04 in the same quarter a year earlier, while analysts forecast $7.89 for the current year. Taken together, the revenue beat and earnings miss left the operating picture mixed.

What does the market snapshot show?

$42.54 was the Thursday opening price for LNC shares. The company carried an $8.10 billion market capitalization, a 2.63 price-to-earnings ratio (share price divided by earnings per share), a 1.21 PEG ratio (price-to-earnings adjusted for growth) and a 1.16 beta, a measure of share-price sensitivity to the broader market.

The debt-to-equity ratio, comparing debt with equity, was 0.73. Both the current ratio, comparing current assets with current liabilities, and the quick ratio, which excludes inventory from current assets, stood at 0.25.

LNC’s 52-week low was $32.18, compared with a high of $47.67. Its 50-day moving average was $41.51, while its 200-day average was $39.05. At the cited open, the shares sat above both recent average price levels.

How have brokerages changed their views?

• UBS Group raised its price objective from $44.00 to $46.00 on Tuesday, October 6 and gave the shares a “neutral” rating.
• Mizuho lowered its target from $53.00 to $49.00 on Wednesday, October 7 and set an “outperform” rating.
• TD Cowen increased its target from $37.00 to $42.00 on Wednesday, July 22 and assigned a hold rating.
• National Bank Financial set a $49.00 price objective on Wednesday, October 7.
• Weiss Ratings reiterated a buy (b) rating on Friday, October 30.

MarketBeat data showed seven Buy ratings, five Hold ratings and one Sell rating across the 13 covering analysts. The combined rating was Hold, while the average target price was $48.67.

Overall, the analyst consensus remains Hold despite a wide spread of individual views.

What does Lincoln National do?

Lincoln National Corporation, operating as Lincoln Financial Group, is a financial services and insurance company focused on protecting income and helping individuals and employers plan for financial needs. Its products include life insurance, annuities, workplace benefits and retirement plan services.

The company primarily serves individuals, employers and retirement plan participants in the United States. Its workplace protection products include disability and life insurance, while retirement services support employers and employees with workplace savings plans.

For the dividend case, the forward test is whether Lincoln National can keep earnings above the $1.80 annual payout.