The Insurance Australia Group Ltd (ASX: IAG) share price booked a 2-year high of $6.14 in early trading on Tuesday.
With no news out of IAG today, it’s possible that investors are buying up this ASX insurance stock in anticipation of a favourable half-yearly report next Friday.
The IAG share price is currently $6.13, up 0.49% while the S&P/ASX 200 Index (ASX: XJO) is down 0.75%.
IAG share price hits 2-year high on Tuesday
The February/March earnings season is now underway, with IAG due to report next Friday.
Goldman Sachs is forecasting IAG to report $628 million in insurance profits and $442 million in cash earnings. The broker expects an underlying insurance margin (ex-reinsurance reinstatement) of 15.1%.
Goldman is tipping that IAG will announce an interim dividend of 12.9 cents per share next Friday.
As we covered last week, the consensus among analysts on CommSec is that IAG will almost double its annual dividend in 2024.
In 2023, IAG paid 15 cents per share in annual dividends. This year, the analysts reckon IAG will pay 27 cents in dividends. Based on the current IAG share price, that equates to a 4.4% dividend yield.
The reason for the anticipated uplift is centred around IAG’s premium increases during this recent period of high inflation.
IAG and other insurance companies have been able to raise their premiums without losing too many customers because consumers consider insurance an essential product.
So, investors may be feeling very optimistic about next week’s numbers.
In a recent note, Goldman said it wanted to know whether premium growth would moderate in 2024 and how cost-of-living pressures and competition between insurers are impacting IAG’s business this year.
Goldman has a neutral rating on IAG, which is now trading higher than the broker’s 12-month share price target of $6.
The post IAG share price hits 2-year high ahead of earnings results next week appeared first on The Motley Fool Australia.
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More reading
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Motley Fool contributor Bronwyn Allen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Goldman Sachs Group. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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