Attention dividend hunters! Cincinnati Financial Corporation (NASDAQ:CINF) will be distributing its dividend of $0.5 per share in 3 days time, on the 16 January 2018, and will start trading ex-dividend on the 19 December 2017. Investors looking for higher income-generating stocks to add to their portfolio should keep reading, as I take a deeper dive into Cincinnati Financial’s latest financial data to analyse its dividend attributes. View our latest analysis for Cincinnati Financial

5 checks you should use to assess a dividend stock

If you are a dividend investor, you should always assess these five key metrics:

• Is it the top 25% annual dividend yield payer?

• Has its dividend been stable over the past (i.e. no missed payments or significant payout cuts)?

• Has dividend per share amount increased over the past?

• Is its earnings sufficient to payout dividend at the current rate?

• Will it be able to continue to payout at the current rate in the future?

How does Cincinnati Financial fare?

The company currently pays out 64.69% of its earnings as a dividend, meaning the dividend is sufficiently covered by earnings. Going forward, analysts expect CINF’s payout to remain around the same level at 66.75% of its earnings, which leads to a dividend yield of around 2.99%. In addition to this, EPS should increase to $3.15. Reliablity is an important factor for dividend stocks, particularly for income investors who want a strong track record of payment and a positive outlook for future payout. CINF has increased its DPS from $1.42 to $2 in the past 10 years. It has also been paying out dividend consistently during this time, as you’d expect for a company increasing its dividend levels. This is an impressive feat, which makes CINF a true dividend rockstar. Compared to its peers, Cincinnati Financial generates a yield of 2.75%, which is on the low-side for insurance stocks.

What this means for you:

Are you a shareholder? With Cincinnati Financial producing strong dividend income for your portfolio over the past few years, you can take comfort in knowing that this stock will still continue to be a robust dividend generator moving forward. But, depending on your current portfolio, it may be beneficial exploring other income stocks to enhance your diversification, or even look at high-growth stocks to complement your steady income stocks. I recommend continuing your research by taking a look at my interactive free list of dividend rockstars as well as high-growth stocks to potentially add to your holdings.

Are you a potential investor? Keeping in mind the dividend characteristics above, Cincinnati Financial is definitely worth considering for investors looking to build a dedicated income portfolio. As always, I urge potential investors to try and get a good understanding of the underlying business and its fundamentals before deciding on an investment. Whether or not you like the stock as a dividend play, it’s still worth checking the price tag. Is Cincinnati Financial still a bargain? Check our latest free analysis to find out!

To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned.