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1 Reliable Dividend Stock to Buy at a Discount This July
With healthcare spending projected to grow 5.4% annually through 2031, health insurance is more relevant than ever. The Cigna Group (CI), a leader in this industry, is poised to thrive by capitalizing on rising chronic diseases and increasing healthcare costs, driving demand for insurance.
Plus, amid ongoing sector rotation and geopolitical uncertainty, a reliable dividend stock like CI can offer steady returns when the market swings wildly, giving investors a solid anchor in choppy waters.
Cigna, with over three decades of steady payouts, shines as a rock-solid pick for income seekers. Plus, with CI stock attractively priced, it’s an even more tempting buy right now.
About Cigna Group Stock
The Cigna Group (CI), headquartered in Connecticut, was created in 1982 by the merger of The Connecticut General Life Insurance Company and INA Corporation. Today, it is a powerhouse in global health services, providing everything from commercial insurance and behavioral health coverage to international health plans. With a market cap of $95.4 billion, Cigna is playing a crucial role in keeping the world’s health in check.
Shares of Cigna have rallied 14.3% over the past 52 weeks and 12.1% on a YTD basis, outperforming the single-digit returns over both time frames for the S&P 500 Healthcare Sector SPDR (XLV) as well as the S&P Dividend SPDR (SDY).
The stock currently trades at 11.78 times earnings and 0.40 times sales, which are both a steep discount to the healthcare sector median valuations of 20x and 3.83x, respectively.
Cigna Beats Q1 Earnings Projections
On May 2, Cigna Group reported its fiscal Q1 earnings results, which sailed past Wall Street’s projections. Total revenues amounted to $57.3 billion, up 23% annually, while adjusted EPS rose 19.6% to $6.47, surpassing estimates by 4.9%.
Cigna’s health services segment Evernorth and insurance segment Healthcare shined, with Evernorth's revenues soaring 28% to $46.2 billion and Healthcare's growing 4% to $13.3 billion. These gains stem from premium rate hikes, operational efficiencies, and expanding their customer base. Cigna exited Q1 with $8.4 billion in cash and cash equivalents, and total current assets of $43.3 billion.
Management raised its earnings guidance for the current year, projecting adjusted EPS of $28.40, up 15 cents from its prior forecast. Revenue is estimated to be $235 billion.
Cigna is expected to announce its fiscal Q2 earnings resultsbefore the market opens on Thursday, Aug. 1. Analysts tracking Cigna expect the company's Q2 EPS to increase 4.7% year over year to $6.42.
Analysts expect the company to report a profit of $28.47 per share in fiscal 2024, up 13.5% year-over-year, and then climb another 12.2% to $31.95 per share in fiscal 2025.
Cigna’s Dividend History
Cigna keeps impressing with its unwavering commitment to rewarding shareholders, paying dividends for 34 consecutive years. In fiscal Q1, the company dished out $401 million in dividends, and bought back 10.1 million shares for $3.4 billion.
On June 20, Cigna paid its shareholders a quarterly dividend of $1.40 per share. Its annualized payout of $5.60 per share translates to a 1.62% yield. Cigna's conservative 19.38% payout ratio makes it a rock-solid pick for income-seeking investors valuing reliability.
What Do Analysts Expect for Cigna Stock?
Last month, Piper Sandler initiated coverage on Cigna with an “Overweight” rating and a price target of $400. The brokerage firm cited Cigna’s diverse role in managed care and its strong foothold in commercial insurance and pharmacy services. Led by Cigna’s edge in the booming specialty pharmacy market, Piper Sandler expects healthy long-term EPS growth of 10% to 14%.
CI has a consensus “Strong Buy” rating overall. Of the 23 analysts in coverage, 17 recommend a “Strong Buy,” two suggest a “Moderate Buy,” and the remaining four analysts advise a “Hold.”
The mean price target of $394.73 suggests an upside potential of 17.6% from Monday's close. The Street-high target price of $435 for Cigna, set by JPMorgan in May, implies the stock could rally as much as 29.5%.
On the date of publication, Sristi Suman Jayaswal did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
