Is the Insurance Australia Group (ASX:IAG) share price a buy for its fully franked dividend?


The Insurance Australia Group (ASX:IAG) share price has gained 24 per cent over the past 12 months, making it one of the top ASX 20 performers over that period.

IAG shares currently trade at $7.94, only a little below its 52-week high of $8.43.

IAG is a leading insurance player with a scale advantage in Australia and New Zealand. It is targeting a high dividend and around 10 per cent compound earnings growth through the cycle.

IAG’s brands include CGU and NRMA.

In February, on nearly 4 per cent like for like gross written premium growth, IAG reported a 23.5 per cent jump in net profit after tax. The company upgraded its reported margin guidance to 15.5 to 17.5 per cent.

The IAG interim fully franked dividend was 14 cents, an increase of 7.7 per cent over the previous year.

Source: Company presentation 

In March, Citi retained a neutral rating for Insurance Australia Group, but still ranks the stock highly although acknowledging its share price was sitting a tad high. The IAG share price is flat since then.

On a trailing basis, IAG shares trade on a fully franked dividend yield of 4.3 per cent, or 6.1 per cent when grossed up for franking credits.

The IAG dividend yield is relatively attractive, especially given interest rates are likely to remain at these current low levels well into 2019.

By comparison, the Suncorp Group (ASX:SUN) share price trades on a fully franked dividend yield of 5.3 per cent. Suncorp shares are currently trading at $13.87, down 4.1 per cent in the last 12 months. 

Here’s how you can strike it rich in the share market…

The best way to strike it rich in the share market is to buy shares that are not only cheap, but growing quickly.

Combining countless hours of research with over 30 years of hands-on stock market investing experience, The Capital Club’s founder Bruce Jackson has just published his definitive list of 3 Cheap and Good ASX Stocks for 2018.

Best of all, the report is absolutely free, exclusively for readers of The Capital Club.

In this comprehensive free report, you’ll find the name of one ASX gold stock that’s not only profitable, but trading at less than 4 times forecast profits.

You’ll also discover the name of a company one fund manager has called the cheapest stock in the ASX 100, and you’ll read about the three catalysts that could push the share price higher in the next six months.

Finally, the report names one of the cheapest retailers trading on the ASX, a company that just picked up the assets of a distressed competitor on the cheap, paying just 2 times earnings. No wonder one top fund manager thinks its share price could at least double.

With the share prices of each of these 3 companies having the potential to double or more, you’ll want to act now. Simply click here or the button below, enter your email address, and this free report will be instantly sent to you.

See the 3 stocks

Contributors to this article may own shares in some of the companies mentioned in this article. The Capital Club has a thorough disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
Bruce Jackson has 30 years of hands on investing experience. He is passionate about stock market investing, running his own portfolio and SMSF. His focus is on small cap growth stocks. You can contact Bruce at