Last week, HCC Insurance Holdings, Inc. (HCC) announced a hike in its quarterly cash dividend to 16.5 cents per share from 15.5 cents per share paid in July 2012. The increased dividend will be paid on October 15, 2012, to shareholders of record as of October 1. Based on the closing share price of $32.37 on August 24, the increased dividend implies a dividend yield of 0.51%, compared with the earlier yield of 0.48%.
HCC follows a policy of raising its dividend every year. This is the 16th consecutive year of dividend rise for the company. Also, it is the 66th consecutive quarter in which the company is paying a cash dividend. The regular dividend hikes reflect HCC’s commitment toward enhancing shareholder value as well as its operating strength, which allows management to raise the dividend regularly.
HCC’s consistent dividend policy is supported by its ample operating cash flows. Based on 100.7 million shares outstanding as of July 27, 2012, the company requires $16.6 million for the payment of the quarterly dividend. Meanwhile, HCC generated cash flow from operations of $244.6 million in the first half of 2012, which is more than adequate to cover the dividend payment.
HCC’s peers such as ACE Limited (ACE), The Travelers Companies Inc. (TRV) and W.R. Berkley Corporation (WRB) also regularly return value to shareholders through dividend payments. Earlier this month, W.R. Berkley declared a cash dividend of 9 cents per share and ACE Limited announced a quarterly dividend of 4 cents per share. Additionally, Travelers declared a quarterly dividend of 46 cents per share last month with its second-quarter financial results.
HCC carries a Zacks #2 Rank, which translates into a short-term Buy rating.Read the Full Research Report on TRV
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