Primerica’s 19% Payout Ratio Shows Why Income Investors Can Sleep Well

Core Viewpoint - Primerica demonstrates strong financial health with a sustainable dividend payout supported by conservative earnings and cash flow metrics [2][3][6]. Financial Metrics - Primerica pays an annual dividend of $4.16 per share, yielding 1.65% [2]. - The earnings payout ratio stands at 19.1%, indicating a very healthy dividend coverage [4][6]. - Operating cash flow coverage for Q3 2025 is 6.0 times, showcasing outstanding cash flow management [4][6]. Cash Flow and Capital Expenditures - In Q3 2025, Primerica generated $202.9 million in operating cash flow while spending only $12.3 million on capital expenditures, resulting in $190.6 million in free cash flow [3]. - Quarterly dividend payments amounted to $33.8 million, further emphasizing strong cash flow coverage [3]. Balance Sheet Strength - As of Q3 2025, Primerica holds $645 million in cash with a debt-to-equity ratio of 0.80, indicating a solid balance sheet [5]. - The insurance subsidiary maintains a risk-based capital ratio of 515%, significantly above the regulatory minimum of 200% [5]. Recent Performance - Q3 2025 revenue increased by 8.1% year-over-year to $839.8 million, while earnings surged by 31.4% to $206.8 million [6][8]. - Management returned $163 million to shareholders in Q3 through $129 million in buybacks and $34 million in dividends [6]. Capital Efficiency - Primerica's return on equity is 34.0%, and the operating margin is 34.2%, reflecting efficient capital deployment [7]. - The profit margin stands at 21.6%, indicating effective conversion of revenue to cash [7].