In order to share more profits with its shareholders, the board of directors of Assured Guaranty Ltd. (AGO) approved an 11% increase in its quarterly dividend. Assured Guaranty will now pay a quarterly dividend of 10 cents per share, up from 9 cents paid on Dec 5, 2012. The increased dividend will be paid on Mar 7, 2013 to shareholders of record as of Feb 21, 2013.
The board had approved a dividend hike in the previous year as well. On Feb 9, 2012, the board approved a 100% increase in dividend to 9 cents from 4.50 cents.
Moreover, Assured Guaranty has maintained a track record of paying quarterly dividends. Based on the closing share price of $19.24 on Feb 7, the increased dividend implies a dividend yield of 2.1%. Its dividend yield is also better than a few other multi-line insurers like Cigna Corp. (CI), with a yield of 0.06%, CNO Financial Group Inc. (CNO), with a yield of 0.79% and FBL Financial Group Inc. (FFG) with a yield of 1.14%.
Based on 197 million shares outstanding as of Sep 30, 2012, the company requires $19.7 million for the payment of the quarterly dividend. Cash balance at the end of the third quarter stood at $133 million, sufficient enough to meet the additional requirement.
Over the last 7 days, there was no earnings momentum. We believe that the decision to share more profits with shareholders might encourage analysts to revise their estimates upward.
Assured Guaranty is yet to report its fourth-quarter and full-year 2012 results. The Zacks Consensus Estimates for the fourth quarter and full year 2012 are pegged at 71 cents per share and $2.55 per share, respectively. These represent a year-over-year decrease of 25.6% and 21.7%, respectively. Assured Guaranty presently carries a Zacks Rank #1 (Strong Buy).
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