Reasons Why Investors Should Retain Principal Financial Stock Now

Core Viewpoint - Principal Financial Group, Inc. (PFG) has gained investor favor due to strategic buyouts, financial flexibility, strong retention, business growth, positive net cash flow, and effective capital deployment [1] Financial Performance - PFG currently holds a Zacks Rank 3 (Hold) and has experienced a stock loss of 0.9% over the past year, while the industry has grown by 11.1% [2] - The Zacks Consensus Estimate for PFG's 2025 earnings per share indicates a 19.3% increase from 2024 estimates, while revenues are expected to rise by 6.2% [4] Growth Drivers - Revenue growth for PFG is anticipated to improve long-term due to higher premiums, fees, and improved net investment income across segments [5] - The Principal International segment is expected to benefit from increased single-premium annuity sales in Chile, with operating earnings positively impacted by foreign currency tailwinds [5] - The Specialty Benefits Insurance business is projected to continue benefiting from record sales, strong retention, and employment growth, contributing to pre-tax operating earnings [6] Capital Management - PFG's extensive distribution network, strategic buyouts, and operational discipline are expected to enhance asset growth under management [7] - The company maintains a strong capital position with sufficient cash generation capabilities and liquidity, having adjusted the target RBC level to a range of 375-400% [7] - For 2024, PFG aims for 9% to 12% growth in earnings per share and 75% to 85% free capital flow conversion [8] Shareholder Returns - PFG's wealth distribution strategy includes share buybacks and dividend payments, with a 9% dividend increase in Q3 2024 for the sixth consecutive quarter, aligning with a targeted 40% payout ratio [11] - The company has a solid dividend yield of 3.6%, surpassing the industry average of 2.4% [11] - PFG plans to deploy $1.5-$1.8 billion in capital for 2024, including $800 million to$1.1 billion for share repurchases, targeting 35-45% share repurchases based on net income [12]