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Here’s why Insurance Australia Group Ltd has plummeted today

Investors concerned as to why Insurance Australia Group Ltd (ASX: IAG) shares have dropped 34 cents or 5.25% today need not fret – the stock is simply trading ex-dividend.

When the insurance giant reported its $1.233 billion profit late last month, it also declared a fully-franked dividend of 26 cents per share, taking its full-year dividend to 39 cents. This puts the stock on a very generous 6.3% fully franked dividend or a grossed up 9.1% yield, which is certainly nothing to be sneezed at considering the low interest rate environment.

Currently, Insurance Australia Group is trading on a P/E multiple of just 11 which to me seems a little underdone, especially considering its recent acquisition of Wesfarmers Ltd (ASX: WES)’s insurance underwriting business which should help drive revenues strongly over the coming years.

As such, Insurance Australia Group could be a great way for investors to beat the market over the coming years. Another company you should strongly consider is one our top analysts recently identified which not only offers a tantalising yield but also fantastic growth prospects.

For instant access to our newly updated report titled "The Motley Fool's Top Dividend Stock for 2014", which reveals this ultra-promising stock's name and code, simply click here now - it's FREE!

Motley Fool contributor Ryan Newman does not own shares in any of the companies mentioned.

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