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Highlights
- Insurance Australia Group shows strong returns despite recent decline.
- Impressive 3-year growth in earnings per share.
- Total shareholder return highlights dividend impact.
For investors in Insurance Australia Group Limited (ASX:IAG), the recent 15% drop in share price over the last quarter may be a cause for concern. However, it's important to zoom out and look at the bigger picture. Over the past three years, shareholders have enjoyed a remarkable 71% increase in share price, outpacing the broader market index.
Despite a noticeable AU$1.0 billion reduction in market capitalization this week, the long-term fundamentals paint a positive picture. During this period of share price ascent, Insurance Australia Group recorded an impressive compound earnings per share (EPS) growth of 83% annually. Interestingly, the share price has risen at an average of 20% annually, suggesting a market sentiment shift despite strong earnings growth.
Delving deeper, the total shareholder return (TSR) over the last three years stands at an impressive 88%, significantly boosted by generous dividend payouts. This metric provides a holistic view of shareholder returns, including reinvested dividends and other financial actions like capital raisings and spin-offs. In contrast, the pure share price return was slightly lower, emphasizing the role of dividends in the overall positive investment outcome.
From a different angle, Insurance Australia Group's shareholders who have held the stock for the past year have gained a 17% return, dividends included. This performance exceeds the annual TSR average of 7% over five years, hinting at positive sentiment towards the company amid potential business momentum.
