Assurant (AIZ) Raises Dividend, Ups Share Buyback Capacity
Assurant, Inc.’s AIZ board of directors recently approved a 3% hike in its quarterly dividend in a bid to enhance shareholder value. The insurer will now pay out a quarterly dividend of 72 cents per share compared with 70 cents paid out in August 2023. The meatier dividend will be paid out on Dec 18, 2023, to shareholders of record as of Nov 27.
The recent hike marked the 19th consecutive dividend increase by Assurant since its initial public offering in 2004. AIZ has consistently hiked its dividend, with the metric witnessing an eight-year (2016-2023) CAGR of 4.3%. Based on the stock’s Nov 9 closing price of $161.23, the new dividend will yield 1.7% to Assurant.
Besides the regular dividend hike, Assurant remains committed to returning excess cash to shareholders through share repurchases. As of Sep 30, 2023, $204.5 million aggregate cost at purchase remained unused under the repurchase authorization. From Oct 1 through Oct 31, 2023, the company repurchased approximately 0.2 million shares for $30 million. Simultaneous with the dividend hike announcement, the insurer’s board of directors sanctioned a repurchase program for up to $600 million of the company’s shares. The $600 million share repurchase authorization is in addition to the company’s current authorization, of which nearly $174 million remained unused as of Oct 31, 2023.
The recent dividend hike highlights AIZ’s commitment toward prudent capital management, reflecting its sustained operational performance over a period of time and its sound financial prospects. A solid capital position supports effective capital deployment. The insurer uses the cash inflows primarily to make dividend payments to stockholders, repurchase shares and fund investments and acquisitions. This multi-line insurer exited the third quarter with liquidity of $491 million, which was $266 million higher than the company’s current targeted minimum level of $225 million.
This Zacks Rank #2 (Buy) multi-line insurer expects to deploy capital primarily to support business growth by funding investments, mergers and acquisitions and returning capital to shareholders in the form of share repurchases and dividends.
Given the solid capital level of the insurance industry and an improving operating backdrop favoring strong operational performance, insurers like American Financial Group AFG and Brown & Brown, Inc. BRO have resorted to effective capital deployment to enhance shareholders' value.
In November 2023, American Financial Group also declared a special cash dividend of $1.50 per share. The aggregate of which will be nearly $126 million. American Financial Group’s 2.6% dividend yield is better than the industry average of 0.3%, making the stock an attractive pick for yield-seeking investors. AFG’s robust operating profitability at the property and casualty segment and effective capital management support shareholder returns.
In October 2023, the board of directors of Brown & Brown approved a 13% hike in its dividend. This marks the 30th straight year of dividend hike. The strong capital and liquidity position enables BRO to enhance shareholder value via dividend increases. Moreover, consistent operational results have helped the insurer generate solid cash flows for deployment in strategic initiatives as well as shareholder-friendly moves.
Price Performance
Shares of Assurant have gained 25.8% in a year against the industry’s decline of 5.1%. We expect strong segmental performance along with a robust capital position to help shares retain the momentum.
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In the past year, shares of Brown & Brown have gained 26.7% while that of American Financial lost 23.7%.
Another Stock to Consider
Another top-ranked stock from the multi-line insurance industry is Everest Group, Ltd. EG, carrying a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Everest Group has a solid track record of beating earnings estimates in three of the last trailing four quarters, while missing in one, the average being 24.50%. In the past year, EG has gained 23.1%.
The Zacks Consensus Estimate for EG’s 2023 and 2024 earnings per share is pegged at $52.78 and $59.02, indicating a year-over-year increase of 94.9% and 11.8%, respectively.
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Assurant, Inc. (AIZ) : Free Stock Analysis Report
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