Key Takeaways
- Prudential Financial yields 5.0% and MetLife yields 2.5%, and their dividends grew 4.2% and 4.3% a year from fiscal 2020 to fiscal 2025.
- Both dividends are well-covered: Prudential paid out 37% of fiscal 2025 normalized EPS, and MetLife paid out 25%.
- Prudential’s main risk is Japan, where a sales suspension is expected to cost $525 million to $575 million of 2026 pretax adjusted operating income.
- Prudential has committed to making the changes needed to resume sales in Japan by Nov. 5, which is the date to watch.
Any retiree hunting for dividend income among the big life insurers will spot the gap right away: Prudential Financial (PRU) yields 5.0%, twice the 2.5% at MetLife (MET).
Both had strong second quarters, so the choice comes down to the dividends themselves.
So for someone who needs a check they can count on, which one is the better buy?
| Metric | Prudential Financial (PRU) | MetLife (MET) |
|---|---|---|
| Dividend yield | 5.0% | 2.5% |
| Annual dividend, current rate | $5.60 | $2.37 |
| Dividend growth, fiscal 2020–2025 | 4.2% a year | 4.3% a year |
| Payout ratio of normalized EPS, fiscal 2025 | 37% | 25% |
| Payout ratio of normalized EPS, fiscal 2026 consensus | 39% | 23% |
| Net debt/EBITDA (LTM) | 7.69x | 4.97x |
| Forward P/E (NTM) | 8.1x | 9.1x |
Prudential: the bigger check, still well-covered
Prudential pays $1.40 a share each quarter, or $5.60 a year, and the business behind that dividend is in good shape. In the second quarter, after-tax adjusted operating income rose to $1.44 billion, or $4.08 a share, from $1.28 billion, or $3.58, a year earlier. Group Insurance posted record quarterly earnings.
Chairman and CEO Andrew Sullivan is also simplifying the company. He raised its cost-savings target to about $750 million in pretax run-rate benefits by year-end 2028, up from $150 million in 2027. In his words, “the status quo is not an option.”
The dividend is how Prudential returns most of its cash: it made up $493 million of the $743 million returned to shareholders in the second quarter. That dividend took a well-covered 37% of fiscal 2025 normalized EPS, and the ratio rises only to 39% on fiscal 2026 consensus. It held up through a bad year, too. Normalized EPS fell from $14.58 in fiscal 2021 to $9.46 in fiscal 2022, and the dividend still rose, from $4.60 to $4.80.
…and then the payout ratio came back down, from 50.7% in fiscal 2022 to 37.4% in fiscal 2025.
The main risk is Japan. Prudential expects the sales suspension at Prudential of Japan to cost $525 million to $575 million of 2026 pretax adjusted operating income.
MetLife: a smaller check with a thicker cushion
Where Prudential leans on its dividend, MetLife leans on buybacks. About $700 million of the more than $1.1 billion it returned in the second quarter went to repurchases. President and CEO Michel Khalaf puts growth first: “Our first priority is to fund responsible organic growth where MetLife has structural advantages and opportunities to earn attractive risk-adjusted returns.”
That growth is showing up. Second-quarter adjusted EPS rose 20% to $2.43 from a year earlier, with Group Benefits up 25%. Consensus has normalized EPS climbing from $8.83 in fiscal 2025 to $10.14 in fiscal 2026.
That gives the dividend a very comfortable cushion: it took 25% of fiscal 2025 normalized EPS, and it would take 23% on fiscal 2026 consensus. Earnings have outrun the dividend for years. Normalized EPS rose from $4.59 a share in fiscal 2016 to $8.83 in fiscal 2025, while the dividend went from $1.57 to $2.25.
…which brought the payout ratio down from 34.2% to 25.5%.
The main risk is that Group Benefits’ favorable underwriting fades. MetLife executive Ramy Tadros expects those margins to “gradually normalize over time,” though he stressed “the gradual nature of this.”
So which dividend wins?
For retirees, Prudential is the better dividend stock. What decides it is the size of the check, as long as the check is safe. Prudential’s is twice as big, and its payout ratio still leaves plenty of room. Its dividend also grows about as fast: 4.2% a year from fiscal 2020 to fiscal 2025, against 4.3% at MetLife.
Here’s what that means in dollars. $10,000 in Prudential pays $500 a year today, against $250 in MetLife. At each company’s 5-year rate, Prudential’s income grows to about $723 in year 10, a 7.2% yield on the original $10,000. MetLife’s grows to about $366, or 3.7%. At those rates, MetLife’s income wouldn’t catch up for more than 30 years.
Nor are you paying up for the yield. Prudential trades at 8.1x forward earnings, right at its five-year average. Over that stretch it has ranged from a 6.1x low in May 2023 to a 10.4x high in April 2022.
This isn’t to say MetLife’s dividend isn’t safe. It’s the better-covered of the two, its earnings are growing faster, and it carries less debt by TIKR’s measure. It’s just that MetLife sends more of its spare cash to buybacks, and a retiree can’t spend a buyback.
Of course, Prudential of Japan is still a work in progress. Management has committed to having the changes needed to resume sales there in place by Nov. 5.
So what is Prudential Financial stock actually worth?
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any of the stocks mentioned. Thank you for reading, and happy investing!
