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Brown & Brown (BRO) Increases Quarterly Dividend by 11.1%

Zacks Equity Research

Brown & Brown, Inc.’s BRO investors once again find a reason to cheer for as the company’s board of directors has approved a quarterly dividend hike of 11.1%. The new cash dividend of 15 cents per share has been raised from the earlier quarterly dividend of 13.50 cents. The payout will be made on Nov 8, 2017 to the shareholders of record as of Oct 27, 2017. 

The annualized dividend of 60 cents per share reflects a 1.2% yield, based on the closing price of $49.39 on Oct 13, 2017.

Brown & Brown has an impressive track record of increasing its dividend each year and this marks the twenty-fourth annual dividend hike by the broker. With this latest raise, the insurance broker happens to increase payout at a five-year CAGR of 9.7%. The company intends to shell out $70 million in dividends in 2017.

With about 139.9 million shares outstanding at the end of second-quarter 2017, the company needs to dish out $209.9 million quarterly or $839.5 million annually. A strong capital and liquidity position enables Brown & Brown to enhance shareholder value via dividend raises and share buybacks. The company’s strategic endeavors to enhance shareholders’ value make it an attractive pick for yield-seeking investors.

Time and again, companies have resorted to hiking dividends to restore the faith of shareholders. This also testifies a company’s operational strength. Earlier in August, American Financial Group, Inc AFG had rewarded its investors with an annual dividend raise of 12%.

Price Performance

Shares of Brown & Brown have underperformed the industry in a year’s time. The stock has surged 32.5% compared with the industry’s registered rally of  37.6%. Growth initiatives, solid cash flow and a prudent capital deployment are expected to drive the stock higher.

Zacks Rank & Stocks to Consider

Brown & Brown carries a Zacks Rank #3 (Hold). Some better-ranked stocks from the insurance industry are Marsh & McLennan Companies, Inc. MMC and NMI Holdings Inc. NMIH.

Marsh & McLennan Companies, Inc., which carries a Zacks Rank #2 (Buy), provides advice and solutions in the areas of risk, strategy and people worldwide. The company delivered positive surprises in three of the last four quarters with an average beat of 3.76%.

NMI Holdings Inc., which sports a Zacks Rank #1 (Strong Buy), provides private mortgage guaranty insurance services in the United States. The company delivered positive surprises in three of the last four quarters with an average beat of 11.72%. You can see the complete list of today’s Zacks #1 Rank stocks here.

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Marsh & McLennan Companies, Inc. (MMC) : Free Stock Analysis Report
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