Dai-ichi Life Group (formerly Dai-ichi Life HD, 8750) financial results analysis | Reevaluate insurance stocks with dividend payout ratio of 50% or more and ultra-long-term interest rates

[Summary]

Dai-ichi Life Group (8750, formerly Dai-ichi Life Holdings) announced its financial results for the fiscal year ending March 2026 on May 15, 2026.

The most noteworthy point is that the company has decided on a policy of increasing the dividend payout ratio to 50% or more from the fiscal year ending March 2027, and raised the annual dividend forecast to 72 yen.

Based on the closing price of 1,500 yen on May 14th, the yield of a 72 yen dividend is approximately 4.8%. On the other hand, the closing price on May 15th after the announcement of financial results and dividend increase rose to 1,618 yen, and the dividend yield based on this closing price is approximately 4.45%.

72yen ÷ 1,500yen = 4.8%
72yen ÷ 1,618yen = 4.45%

The point this time is not simply an increase in dividends.

While bank stocks are likely to be evaluated on the basis of improved interest margins due to increases in short- and medium-term interest rates, Dai-ichi Life Group is a stock where increases in super-long-term interest rates such as 30-year and 40-year government bonds are likely to be the basis for evaluation of improvements in bond investment yields and forward spreads.

First, the conclusion

Dai-ichi Life Group is a candidate for re-evaluation in the financial sector following megabanks.

There are four points I would like to discuss in this financial report:

What's important is that it's not simply a matter of "people buy stocks because they have a high dividend yield."

The company is being praised for the fact that by raising the dividend payout ratio to over 50%, it is now easier to reflect profit growth in shareholder returns, and that increases in ultra-long-term interest rates are more likely to lead to improved investment returns for insurance companies.

Evaluation of financial results

Consolidated business results for the fiscal year ending March 2026 were 11,308.2 billion yen in ordinary revenue, 753.6 billion yen in ordinary income, and 436.5 billion yen in net income attributable to owners of parent.

While ordinary revenue increased compared to the previous fiscal year, net income decreased. However, the company expects net income attributable to parent company shareholders to be 513 billion yen for the fiscal year ending March 2027.

Number points

Looking only at accounting net income, profits will decrease in the fiscal year ending March 2026.

However, company information materials show that group adjusted profit was 551.5 billion yen, marking the third consecutive year of record high profit. When looking at an insurance company, you need to look at accounting profit, adjusted profit, forward spread, and interest rate assumptions separately.

Shareholder returns

The most important factor this time is our shareholder return policy.

A policy has been decided to increase the dividend payout ratio to 50% or more from the fiscal year ending March 2027, and the annual dividend forecast for the fiscal year ending March 2027 is 72 yen.

This dividend level is easy to see for investors in high-dividend stocks, new NISA funds, and medium- to long-term funds that focus on income.

However, the stock price on May 15th has already risen to 1,618 yen. Therefore, from now on, rather than "cheap stocks with a yield of 4.8%,"

“An insurance stock valued for interest rate normalization and profit growth while maintaining a yield in the mid-4% range”

It is more realistic to look at it as

Differences from bank stocks

If Dai-ichi Life Group is lumped together as a financial stock like bank stocks, it is easy to misjudge the valuation axis.

The main evaluation criteria for bank stocks is an improvement in the loan-to-deposit margin due to a rise in short- and medium-term interest rates.

On the other hand, for life insurance companies, asset management that corresponds to long-term insurance liabilities is important. In particular, increases in ultra-long-term interest rates such as 30- and 40-year government bonds will likely lead to improved investment yields after new bonds or bond replacements.

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Company materials also indicate that the yield of the yen fixed income portfolio has improved by replacing bonds in response to rising domestic interest rates, and that the company plans to continue improving the yield of the bond portfolio from the fiscal year ending March 2027 onwards.

This is the biggest point that differentiates us from Mizuho FG and Mitsubishi UFJ.

Chart structure

The stock price on May 15th closed at 1,618 yen, an increase of 7.87% from the previous day, setting a new high for the year.

For this reason, the issue that we had envisioned at the manuscript stage, ``Can the price settle to the 1,500 yen level by the end of the week?'' has already moved a step further.

The current focus is on the next steps.

On the upside, the focus is on whether the price can maintain the 1,600 yen level without ending at a temporary high of 1,618 yen.

On the downside, if the price drops below 1,600 yen due to exhaustion of materials, we will check to what extent we will consider the opening price of 1,500 yen and the low price of 1,474 yen on May 15th.

Volume and supply and demand

The trading volume on May 15th increased to 19.66 million shares.

This indicates that financial results announcements, dividend increases, dividend policy changes, and year-to-date high prices all coincided on the same day, and both short-term funds and medium- to long-term funds may have reacted.

However, while the Taiyo Line is strong on the closing day, the following confirmation is required from the next business day onwards.

The initial movement after the settlement of accounts is strong, but whether the market will become truly strong will depend on whether the market can maintain the high price range with trading volume after the sharp rise.

PBR and Rerating

If we simply compare the closing price of 1,618 yen on May 15th and the net assets per share of 1,181.36 yen at the end of the fiscal year ending March 2026, the PBR is approximately 1.37 times.

1,618yen ÷ 1,181.36yen = 1.37

We have already passed the stage where we can explain things only by "correcting PBR below 1x."

The focus going forward is whether reratings like those of megabanks will continue in insurance stocks as well.

There are three conditions:

The conditions for rerating are not simply how many times the PBR is, but whether ROE, adjusted profit, return policy, and interest rate environment improve at the same time.

Risk factors

The biggest risk is a decline in long-term interest rates and ultra-long-term interest rates.

Insurance stocks are easier to factor in changes in ultra-long-term interest rates than bank stocks. While rising interest rates lead to expectations for an improvement in the forward spread, the same logic is reversed if interest rates suddenly fall.

The risks you should be aware of are as follows.

Even if a company has a strong dividend policy, stock prices will adjust if the interest rate environment turns against them.

View of the second half of 2026

Main scenario

The price will maintain the 1,600 yen level and test towards the 1,700 yen level.

The conditions are: maintaining the closing price in the 1,600 yen range, stable high long-term interest rates, inflow of funds into insurance stocks as a whole, and continued evaluation with a dividend payout ratio of 50% or higher.

In this case, Dai-ichi Life Group will be easily seen as a large-scale financial stock where funds will go after megabanks.

Risk scenario

The price will be readjusted in the range from the low 1,500 yen level to the low 1,600 yen level.

Since the stock price rose significantly on the day of settlement, it is easy to take profits in the short term. If 1,600 yen cannot be maintained, the opening price of 1,500 yen and the low price of 1,474 yen on May 15th will be considered.

However, since the yield based on the 72 yen dividend forecast is likely to be perceived at a lower price, at this point in time, rather than a major collapse, we think it is more likely that a trend will take shape, supported by a high dividend.

Overall evaluation

As of May 2026, Dai-ichi Life Group is a key candidate for the "insurance stock-led interest rate normalization trade."

The material this time is a strong combination of dividend payout ratio of over 50%, 72 yen dividend forecast, profit increase plan for the fiscal year ending March 2027, record group adjusted profit, and super long-term interest rate benefits.

On the other hand, the stock price on May 15th has already risen to 1,618 yen.

Therefore, from now on, it is time to calmly check the following points, rather than just ``buying because good news appears''.

In conclusion, Dai-ichi Life Group is not a "broken stock";

“Insurance stocks aiming to reevaluate the financial sector after megabanks, fueled by high dividends and ultra-long-term interest rates”

It can be evaluated as follows.

However, the sharp rise on May 15th has priced in a lot of short-term expectations. From now on, the fixation of the 1,600 yen level and the direction of ultra-long-term interest rates will be the focus of determining the next room for an increase.

source

• Daiichi Life Group “Financial Results/Financial Materials”: https://www.daiichilife-group.com/investor/library/earning/
• Daiichi Life Group “Summary of Financial Results for the Fiscal Year Ending March 2026”: https://www.daiichilife-group.com/investor/library/earning/pdf/2025/2025_001.pdf
• Daiichi Life Group “Fiscal Year Ending March 2026 Financial Report”: https://www.daiichilife-group.com/investor/library/presentation/pdf/2025_index_phone.pdf
• Yahoo! Finance “Daiichi Life Group (8750) Stock Price/Stock Information”: https://finance.yahoo.co.jp/quote/8750.T