Oct 21 (Reuters) - Shares of Fidelity National Financial (FNF.N) fell as much as 11 percent Thursday, a day after the title insurer's new dividend policy cut 2011 payout by half.
The company said its board approved a dividend payout target of 30 percent of 2010 earnings for next year. Based on current Wall Street expectations for 2010 earnings, the dividend for 2011 will be $0.357, half of the current annual payout of $0.72.
Shares were down 10 percent at $13.25 in morning trade on the New York Stock Exchange. About 1.3 million shares changed hands by 1126 ET, more than double the stock's 50-day average volumes.
"We felt like we wanted to preserve additional cash, take part of that dividend that was being paid out to shareholders and buy stock back, so reduce our shareholder base," Chairman Bill Foley said on a conference call.
"When we compare ourselves to title insurance competitors, they frankly have a much lower payout ratio than we have," Foley said.
Rival First American Corp (FAF.N) currently pays $0.24 as annual dividend, while Stewart Information Services Corp (STC.N) has not paid any dividend in 2010, according to Reuters data.
The company expects to use additional cash for stock repurchase, acquisitions, and debt repayment, it said. (Reporting by Sweta Singh in Bangalore; Editing by Roshni Menon)
When the new dividend policy was announced the price of the stock dropped like a rock. The next few quarters are going to be quite challenging. I could easily be wrong but I'm waiting for a lower entry point.