In its concerted effort to share more profits with shareholders, the board of directors of Assurant, Inc. (NYSE:AIZ) approved a 6% hike in quarterly dividend. This is in tandem with the company’s effort to pay back $1.5 billion to its shareholders by year-end 2017.
The company will now pay a quarterly dividend of 56 cents per share compared with 53 cents paid on Sep 19. Shareholders of record as of Nov 27 will have the meatier dividend in their pockets on Dec 18, 2017.
Following the hike, the annualized rate comes to $2.24 per share. Based on the closing share price of $98.15 as of Nov 10, the increased payout implies a dividend yield of 2.3%, better than the industry average of 0.9%.
Assurant has a solid track of increasing its dividend annually. The company’s dividend has witnessed a five-year CAGR of 28.5%. The recent dividend hike marks the 15th straight dividend increase by the company.
Assurant has a strong capital management policy in place. In the last 18 months, the company paid back $1.3 billion via share buybacks and dividend payments, fulfilling 90% of its commitment to return the target amount to shareholders by the end of 2017. The company’s initiatives are well supported by a solid cash flow generation, which in turn is driven by a sustained solid operational performance. Assurant has delivered positive surprises in all the last four quarters.
Shares of Assurant have gained 14.4% in a year, outperforming the industry’s increase of 11.7%. We believe the company’s initiative to share more profits with its shareholders will continue to drive the shares higher.
Sharing more profit with shareholders through dividends and share repurchases seem to be a well-accepted strategy among insurers to solidify investors’ confidence in their stock. Recently, the board of directors of RLI Corp. (NYSE:RLI) approved $1.75 as a special dividend while Sun Life Financial Inc. (TO:SLF) hiked its dividend by 5%. Earlier in October, Brown and Brown Inc. (NYSE:BRO) too had hiked its dividend by 11.1%.
Assurant carries a Zacks Rank #5 (Strong Sell).
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