Read this before buying QBE Insurance Group Ltd for its dividend

The QBE Insurance Group Ltd (ASX: QBE) share price dropped 2.6% yesterday, but if you’ve been thinking of buying shares in the global insurance provider for its juicy divided there are a few things you need to know.

The first is that QBE shares will go ex-dividend on Thursday, March 7, 2019.  This is the date when shares start selling without the value of its next dividend payment.

An investor needs to own the shares before the ex-date to receive the dividend which will be paid on Thursday, April 18, 2019.

What is QBE Insurance Group’s dividend yield?

At its recent full-year results, QBE declared a dividend of 28 cents per share (cps) for the half year. This was up substantially on the 4 cps dividend declared in the prior corresponding period and at the current share price QBE offers a trailing dividend yield of 4%, partially franked.

Is the QBE dividend sustainable going forward?

This is a great question to ask before buying any company for its dividend.

Last month QBE presented a net profit after tax (NPAT) of US$390 million for the 12 months to 31 December 2018, a sharp turnaround from the US$1.25 billion loss in the prior year, supported by lower catastrophe claims and the dumping of underperforming operations.

The profit was pleasing to see after years of underperformance for investors.

The simplification strategy and improvement in QBE’s operating margins is a promising sign for dividends going forward. However, it is curious to see that despite the positive reported cash profit, net cash flows from operations was negative for the year. This is something I will definitely be keeping my eye on.

Foolish Takeaway

I am forever wary of QBE after years of disappointing results in a highly competitive industry, but it does look like the company has managed to jettison its dead-weight to become sharper and more focused. Baring new catastrophes this should help to increase, or at a minimum maintain, cash returns for investors going forward.

Fortunately, there are several other big companies going ex-dividend on 07 March for income investors to consider, including:

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Motley Fool contributor Regan Pearson has no position in any of the stocks mentioned.

You can follow him on Twitter @Regan_Invests.

The Motley Fool Australia owns shares of and has recommended Corporate Travel Management Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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