Covered on operating earnings, raised again — and paying 3%. Principal declared a quarterly dividend of $0.85 on October 26, 2026, up a penny from the prior quarter and 8% from the year-ago quarter, $3.40 annualized. The company targets a 40% payout of non-GAAP operating earnings — the right base for an insurer, where GAAP net income is depressed by non-operating items — and third-quarter 2026 non-GAAP operating earnings per share were $2.22. Excess and available capital was $1.5 billion at September 30, 2026. The 3.04% yield on the current rate clears the sub-1% line and every check passes, so the card is graded good.
Key risk: Retirement and insurance earnings follow markets and mortality — a market drawdown shrinks the operating earnings the 40% target is measured against.
Changes if: The operating-earnings payout rises above 60%, or the dividend is cut.
- ✓Operating payout About 40% of non-GAAP operating earnings, the company target, pass (<60%) on the sector-appropriate base.
- ✓Leverage basis Insurer, not graded on net debt/EBITDA; graded on operating-earnings payout and capital under the §3 sector note, as on the BNY card.
- ✓Dividend history Raised every year in the record shown; $0.85 is the October 2026 raise. No cut in 10 years.
- ✓Trap screen Yield 3.04% on the current rate, no cut, payout under 100%; not a trap pattern.
What this grade doesn't say: It screens the dividend only — covered, real, compounding. It says nothing about valuation or price: a well-covered payer can still be overpriced, and its price can still fall.