Hanover Insurance Board Approves 12% Increase in Dividend
The board of directors of The Hanover Insurance Group Inc. THG approved a 12% dividend hike, signaling intentions to share more profits with shareholders. The company will now pay a quarterly dividend of 46 cents per shares, up from earlier payout of 41 cents. Notably, the recent approval marks the 11th straight year of dividend increase by this insurer.
The shareholders of record on Dec 18 will receive the meatier dividend on Dec 31. Based on yesterday’s closing share price of $84.64, the increased dividend implies a yield of 2.2%, almost in line with the industry average. Hanover Insurance has a track record of increasing dividend every year. Its dividend has grown at a 4-year CAGR of about 13.7%. The last dividend hike was approved in Dec 2014, when the board approved an 11% increase.
Based on 43.2 million shares outstanding at the end of the third quarter, Hanover Insurance Group will have to dish out around $20 million as quarterly dividend. Its liquidity position is sound enough to support the payout. While cash balance at third-quarter end improved to $385.1 million (up 3.2% from Dec 2014) retained earnings were solid at nearly $1.7 billion (up 12% from Dec 2014). The company’s solid liquidity is supported by the consistent strength in its operational results. The insurer delivered four straight quarters of positive surprises, with an average beat of 17.8%.
Aside from Hanover Insurance Group, some other insurers that have decided to share more profits with shareholders are AXIS Capital Holdings Limited AXS, American Equity Investment Life Holding Company AEL and Everest Re Group Ltd. RE. While the board of directors of AXIS Capital approved a 21% hike recently, the board of Everest Re approved a 21% increase in dividend and that of American Equity Investment raised dividend by 10% last month.
Concerted efforts on the part of the companies to share more profits not only retain investor confidence, but also help in attracting more investors to the stocks, besides testifying to its solid operational results.
Hanover Insurance currently carries a Zacks Rank #3 (Hold).
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