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Principal Financial Group Hikes Dividend by 9% Amid Rising AUM

Principal Financial Group Inc. (PFG) is a leader in global investment management offering businesses, individuals, and institutional clients a wide range of financial products and services with $806.6 billion in assets under management as of December 31, 2020.

The company generated 37% of its revenue from Fees and Other Revenue, 32% of its revenue from Net Investment Income, 26% of its revenue from Premiums and Other Considerations, and the remainder from Net Realized Capital Gains during the first quarter of 2021.

Investment Gains Fuel Q1 Results

Principal Financial Group reported first quarter earnings of $1.87 per share, beating consensus estimates by 60 cents. These earnings were driven by assets under management that increased $13.7 billion throughout the year, reaching a record $820.3 billion by the end of the quarter, helping drive net cash flow of $1.4 billion during the quarter.

Analysts have been lukewarm on the stock. For example, JPMorgan analyst Jimmy Bhullar raised his price target but reiterated a Neutral rating on the shares. Bhullar is less upbeat following the strong performance and expects long-term business fundamentals to remain lackluster, marked by weak return on equity, modest growth, and high tail risk.

The company raised its quarterly dividend by 8.9% to $0.61 per share, which represents a 3.74% forward yield. The dividend is payable on June 25, 2021 to shareholders on record as of June 3, 2021.

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