The Insurance Australia Group Ltd (ASX: IAG) share price has had a tough 12 months. This ASX 200 financial stock and leading Australian insurer was going for $8.65 a share this time last year. However, today, those same shares are currently trading for just $7.54 each (at the time of writing). That puts IAG stock down a nasty 12.9% over the past 12 months.
Considering the broader S&P/ASX 200 Index (ASX: XJO) has risen by about 5.9% over the same period, we can conclude that it has been a lacklustre 12 months to own this stock.
But looking at this disappointing IAG share price today, some investors may get excited about what could be on offer when it comes to dividends. After all, a falling share price boosts the dividend yield one can theoretically obtain from an ASX share. And IAG has historically been known as a generous income payer.
So today, let's check out IAG shares from an income perspective and see what might be on offer from this stock going forward.
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IAG share price: Show me the dividends
Starting off, IAG shares paid out two dividends last year, as is typical of an ASX income stock. The first was the March interim dividend worth 12 cents per share. This payout came partially franked at 60%. The second dividend was the September final dividend, worth 19 cents per share. This dividend was partially franked at 40%.
Both of these payments represented healthy increases over what investors enjoyed in 2024. That year saw IAG fork out an interim dividend worth 10 cents per share, and a final dividend of 17 cents per share. So IAG's income trajectory has been going in the right direction.
Together, this 31 cents per share in annual dividends for 2025 gives the IAG share price a trailing dividend yield of 4.11% at the current $7.54 share price.
Some ASX experts think 2026 might be even more fruitful. A few days ago, my Fool colleague reported that ASX broker UBS had given a 'buy' rating to the IAG share price.
UBS reckons the IAG share price could hit $9.25 over the next 12 months, thanks to a possible net profit of $1 billion. As IAG has a dividend policy of paying out 60% to 80% of net profit after tax as dividends on a full-year basis, this could potentially result in another dividend hike this year if accurate.
No doubt IAG investors would love to hear that. But let's see what happens in 2026.
