Own IAG shares? Here's what's happening in September

It's soon going to be payday for shareholders.

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Owners of Insurance Australia Group Ltd (ASX: IAG) shares can get excited about September because a dividend is on the way.

The business recently reported its FY23 result which included mostly positive numbers.

IAG's gross written premium (GWP) in FY23 was up 10.6% to $14.7 billion. Over the period, the company's insurance profit improved 37% to $803 million and net profit after tax (NPAT) went up 140% to $832 million.

When a company makes a net profit, it enables the board to declare a dividend to reward shareholders.

Incoming payment

IAG decided to declare a final FY23 dividend of 9 cents per share. That was an 80% increase on the FY22 final dividend of 5 cents per share. It also represents a partially franked dividend yield of 1.5%.

When we add the FY23 final dividend to the interim dividend, the full-year dividend amounts to 15 cents. That's a 36% increase compared to the annual dividend of 11 cents per share the previous year.

The full-year dividend represents a partially franked dividend yield of 2.6%.

IAG has told shareholders the payment date for the FY23 final dividend is 28 September 2023.

However, any new investors have missed out on the dividend because the ex-dividend date was 29 August 2023. As such, IAG shares needed to be held before that date for shareholders to be eligible for the payout. The dividend re-investment plan (DRP) election date was 31 August 2023.

Potential FY24 dividend for owners of IAG shares

On Commsec, the current estimate is that the insurance giant may pay an annual dividend per share of 26.7 cents per share.

At the current IAG share price, that possible annual payment could translate into a dividend yield of 4.6%, excluding the impact of franking credits.

However, any dividend payments for shareholders will depend on how much profit the company is able to generate in FY24 (and beyond). Commsec estimates currently suggest the business could generate 34.2 cents of earnings per share (EPS), which would be enough to fund that projected dividend.

IAG share price snapshot

Since the start of 2023, IAG shares have gone up 24%. That compares to a 5% rise for the S&P/ASX 200 Index (ASX: XJO).

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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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