Principal Financial Group (NYSE: PFG) and Aegon NV (NYSE:AEG) are both large-cap finance companies, but which is the better investment? We will contrast the two businesses based on the strength of their dividends, earnings, institutional ownership, analyst recommendations, risk, valuation and profitability.

Risk & Volatility

Principal Financial Group has a beta of 1.71, indicating that its share price is 71% more volatile than the S&P 500. Comparatively, Aegon NV has a beta of 1.42, indicating that its share price is 42% more volatile than the S&P 500.

Analyst Ratings

This is a summary of recent ratings and recommmendations for Principal Financial Group and Aegon NV, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Principal Financial Group 1 6 2 0 2.11
Aegon NV 0 5 0 0 2.00

Principal Financial Group currently has a consensus price target of $66.78, indicating a potential downside of 2.93%. Aegon NV has a consensus price target of $4.80, indicating a potential downside of 17.95%. Given Principal Financial Group’s stronger consensus rating and higher possible upside, equities research analysts clearly believe Principal Financial Group is more favorable than Aegon NV.

Profitability

This table compares Principal Financial Group and Aegon NV’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Principal Financial Group 12.35% 13.55% 0.63%
Aegon NV 5.18% 6.73% 0.40%

Valuation and Earnings

This table compares Principal Financial Group and Aegon NV’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
Principal Financial Group $12.38 billion 1.60 $1.32 billion $6.10 11.28
Aegon NV $37.25 billion 0.32 $483.58 million $0.91 6.45

Principal Financial Group has higher revenue, but lower earnings than Aegon NV. Aegon NV is trading at a lower price-to-earnings ratio than Principal Financial Group, indicating that it is currently the more affordable of the two stocks.

Dividends

Principal Financial Group pays an annual dividend of $1.88 per share and has a dividend yield of 2.7%. Aegon NV pays an annual dividend of $0.25 per share and has a dividend yield of 4.3%. Principal Financial Group pays out 30.8% of its earnings in the form of a dividend. Aegon NV pays out 27.5% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Aegon NV has raised its dividend for 5 consecutive years. Aegon NV is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Institutional and Insider Ownership

68.6% of Principal Financial Group shares are held by institutional investors. Comparatively, 10.6% of Aegon NV shares are held by institutional investors. 1.5% of Principal Financial Group shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Summary

Principal Financial Group beats Aegon NV on 13 of the 17 factors compared between the two stocks.

Principal Financial Group Company Profile

Principal Financial Group, Inc. is an investment management company. The Company offers a range of financial products and services, including retirement, asset management and insurance. Its segments include Retirement and Income Solutions; Principal Global Investors, Principal International; U.S. Insurance Solutions, and Corporate. The Company offers a portfolio of products and services for retirement savings and retirement income. The Company’s Principal Global Investors segment manages assets for investors around the world. The Company offers pension accumulation products and services, mutual funds, asset management, income annuities and life insurance accumulation products. The Company’s U.S. Insurance Solutions segment provides group and individual insurance solutions. It focuses on small and medium-sized businesses, providing a range of retirement and employee benefit solutions, and individual insurance solutions to meet the needs of the business owners and their employees.

Aegon NV Company Profile

Aegon N.V. (Aegon) is an international life insurance, pensions and asset management company. The Company’s segments include the Americas, which includes the United States, Mexico and Brazil; the Netherlands; the United Kingdom; Central & Eastern Europe; Spain & Portugal; Asia, and Aegon Asset Management. It offers protection against mortality, morbidity and longevity risks, including traditional and universal life. It offers products with mortality, morbidity, and longevity risks, including traditional and universal life; mortgages; annuity products, and banking products. It offers individual protection products, such as annuities, term insurance, income protection and international/offshore bonds. It has activities in the Czech Republic, Hungary, Poland, Romania, Slovakia and Turkey. It offers life insurance marketed to high-net-worth individuals in Hong Kong and Singapore. It also offers investment products covering third-party customers, insurance-linked solutions.

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