Cincinnati Financial Corp. (CINF) Dividend Stock Analysis

This article originally appeared on The DIV-Net June 20, 2011. Linked here is a detailed quantitative analysis of Cincinnati Financial Corp. (CINF). Below are some highlights from the above linked analysis: Company Description: Cincinnati Financial Corp. markets primarily property and casualty coverage. It also conducts life insurance and asset management operations. Fair Value: In calculating fair value, I consider the NPV MMA Differential Fair Value along with these four calculations of fair value, see page 2 of the linked PDF for a detailed description: 1. Avg. High Yield Price 2. 20-Year DCF Price 3. Avg. P/E Price 4. Graham Number CINF is trading at a discount to only 4.) above. The stock is trading at a slight premium to its calculated fair value of $28.13. CINF did not earn any Stars in this section. Dividend Analytical Data: In this section there are three possible Stars and three key metrics, see page 2 of the linked PDF for a detailed description: 1. Free Cash Flow Payout 2. Debt To Total Capital 3. Key Metrics 4. Dividend Growth Rate 5. Years of Div. Growth 6. Rolling 4-yr Div. > 15% CINF earned three Stars in this section for 1.), 2.) and 3.) above. A Star was earned since the Free Cash Flow payout ratio was less than 60% and there were no negative Free Cash Flows over the last 10 years. The stock earned a Star as a result of its most recent Debt to Total Capital being less than 45%. CINF earned a Star for having an acceptable score in at least two of the four Key Metrics measured. The company has paid a cash dividend to shareholders every year since 1954 and has increased its dividend payments for 51 consecutive years. Dividend Income vs. MMA: Why would you assume the equity risk and invest in a dividend stock if you could earn a better return in a much less risky money market account (MMA) or Treasury bond? This section compares the earning ability of this stock with a high yield MMA. Two items are considered in this section, see page 2 of the linked PDF for a detailed description: 1. NPV MMA Diff. 2.12... Read more

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