Definitive Analysis
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Principal Financial Group, Inc. (PFG)

Company Dividend Discount ModelIndustry: Insurance - DiversifiedSector: Financial Services

Valuation Snapshot

Stable Growth$62.73 - $95.58$78.12
Multi-Stage$89.69 - $98.24$93.88
Blended Fair Value$86.00
Current Price$82.91
Upside3.73%
DecisionDon't Buy

Dividend History & Growth Metrics (10Y)

Metric5Y CAGR10Y CAGR2024202320222021202020192018201720162015
DPS1.67%5.75%2.902.752.832.882.702.672.632.382.051.94
YoY Growth--5.26%-2.62%-1.80%6.44%1.40%1.24%10.85%16.15%5.42%17.10%
Dividend Yield--3.43%3.20%3.80%3.92%4.51%8.51%5.07%3.90%3.24%4.92%

Stable Growth Model (Adjusted)

(USD in Millions except Per Share Data)
Net Income To Common (M)1,573.50
(-) Cash Dividends Paid (M)677.30
(=) Cash Retained (M)896.20
MetricLOWBASEHIGH
Required Retention Ratio20.0%12.5%7.5%
(=) Cash Required (M)314.70196.69118.01
Cash Retained (M)896.20896.20896.20
(-) Cash Required (M)-314.70-196.69-118.01
(=) Excess Retained (M)581.50699.51778.19
(/) Shares Outstanding (M)227.29227.29227.29
(=) Excess Retained per Share2.563.083.42
LTM Dividend per Share2.982.982.98
(+) Excess Retained per Share2.563.083.42
(=) Adjusted Dividend5.546.066.40
WACC / Discount Rate9.10%9.10%9.10%
Growth Rate0.25%1.25%2.25%
Fair Value$62.73$78.12$95.58
Upside / Downside-24.34%-5.77%15.28%

Multi-Stage Model: Projections

(USD in Millions)
MetricTTMDec-27Dec-28Dec-29Dec-30Dec-31Terminal
Net Income (M)1,573.501,593.131,613.011,633.131,653.511,674.131,724.36
Payout Ratio43.04%52.44%61.83%71.22%80.61%90.00%92.50%
Projected Dividends (M)677.30835.36997.271,163.081,332.871,506.721,595.03

Multi-Stage Valuation

MetricLOWBASEHIGH
WACC / Discount Rate9.10%9.10%9.10%
Growth Rate0.25%1.25%2.25%
Year 1 PV (M)758.14765.70773.26
Year 2 PV (M)821.40837.87854.50
Year 3 PV (M)869.41895.69922.49
Year 4 PV (M)904.23940.85978.58
Year 5 PV (M)927.67974.871,023.98
PV of Terminal Value (M)16,104.3816,923.8017,776.23
Equity Value (M)20,385.2321,338.7922,329.05
Shares Outstanding (M)227.29227.29227.29
Fair Value$89.69$93.88$98.24
Upside / Downside8.17%13.23%18.49%

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