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Assurant (AIZ) to Share More Profits, Ups Dividend by 5%

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Zacks Equity Research
·4 min read
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Assurant, Inc.’s AIZ board of directors recently approved a 5% hike in its quarterly dividend in a bid to enhance shareholder value. The company will now pay out a quarterly dividend of 66 cents per share compared with 63 cents paid out on Jul 9, 2020. The meatier dividend will be paid out on Dec 21, 2020 to shareholders of record as of Nov 30.

Prior to this, in November 2019, the insurer had hiked annual dividend by 5% to 63 cents per share. Notably, the company has consistently hiked its dividend with the metric witnessing a five-year CAGR (2014-2020) of 16.7%. However, the current dividend yield is 1.9%, lower than the industry average of 2.5%.

This recent hike marked the 16th consecutive dividend increase by the company since its initial public offering in 2004.

The company has been increasing its payout each year since December 2017. The recent dividend hike highlights the company’s commitment toward prudent capital management, reflecting its sustained operational performance over a period of time.

The company’s capital position has remained strong throughout the pandemic. In the third quarter, it resumed buybacks and returned over 50% of its $1.35 billion objective from the start of 2019 through the end of September 2020. It expects to return the balance by the end of 2021 as it had originally planned, supported by the strong cash flow generated by the lifestyle and housing businesses.

In the first nine months 2020, the company repurchased shares for $153.2 million, exclusive of commissions. As of Sep 30, 2020, $333.1 million remained under the board repurchase authorization. The timing and the amount of future repurchases will depend on market conditions, financial condition, results of operations, liquidity and other factors, including the impact of COVID-19 on business.

In the first nine months of 2020 and the year ended Dec 31, 2019, the company repurchased shares and paid dividends worth $268.3 million and $426.3 million, respectively. In the fourth quarter through Oct 30, it repurchased additional shares worth $41 million.

It expects to deploy capital primarily to support business growth, fund other investments and return capital to shareholders, subject to board’s approval and market conditions.

Assurant’s consistent dividend payments make it an attractive pick for yield-seeking investors. Given its favorable operating performance, we expect the company to continue with its dividend track record, which, in turn, will continue to enhance shareholder value.

Shares of this Zacks Rank #5 (Strong Sell) multi-line insurer have lost 0.9% in a year compared with the industry’s decline of 12.1%. However, we expect strong segmental performance along with a robust capital position to aid the stock in the near term.

Stocks to Consider

Some better-ranked stocks from the same space are Old Republic International ORI, Horace Mann Educators HMN and James River Group Holdings JRVR, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Old Republic International beat estimates in the trailing four quarters by 49.02%, on average.

Horace Mann Educators surpassed estimates in each of the last four quarters, with the average surprise being 22.05%.

James River surpassed estimates in three of the last four quarters, with the average positive surprise being 11.68%.

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