Brown & Brown (BRO) Shares More Profits, Ups Dividend by 13%
In its concerted efforts to enhance shareholder value, the board of directors of Brown & Brown, Inc. BRO approved a 13% hike in its dividend. With this, the payout is now pegged at 13 cents per share compared with the earlier payout of 11.5 cents per share.
This marks the 30th straight year of dividend hike. The raised dividend will be paid out on Nov 15 to shareholders of record as of Nov 1.
Prior to this, the company had raised its quarterly dividend by 12.2% in October 2022. Notably, the company has increased its dividend for the last 29 years, seeing a six-year (2018-2023) CAGR of 10.8%. This makes Brown & Brown an attractive pick for yield-seeking investors.
Based on the stock’s Oct 18 closing price of $68.85, the new dividend will yield 0.6% to the company.
Besides regular dividend hike, BRO remains committed to returning excess cash to shareholders through share repurchases. From Jan 1, 2023 to Mar 31, 2023, the insurer completed share repurchases in the open market for $0.1 million. No shares were repurchased in the open market for the period of Apr 1, 2023 to Jun 30, 2023. After completing these open market share repurchases, Brown & Brown has outstanding approval to purchase approximately $249.5 million, in the aggregate, of the insurance broker's outstanding common stock.
The strong capital and liquidity position enables Brown & Brown to enhance shareholder value via dividend increases and share buybacks. Backed by a sustained operational performance, the company has maintained a strong liquidity position. BRO exited the second quarter of 2023 with cash and cash equivalents of $627.9 million. Moreover, consistent operational results have helped the insurer generate solid cash flows for deployment in strategic initiatives as well as shareholder-friendly moves. The company had a strong year for cash conversion due to the strength of its operating model and diversity of businesses.
Brown & Brown expects that its existing cash, cash equivalents, short-term investment portfolio and funds generated from operations, together with the funds available under the Revolving Credit Facility, to be sufficient to satisfy normal liquidity needs for at least the next 12 months and thereafter.
Shares of this Zacks Rank #3 (Hold) insurance broker have gained 20.8% year to date, outperforming the industry’s growth of 13%. The company’s efforts to expand capabilities and extend geographic footprint through buyouts and its solid capital position should continue to drive shares higher.
Image Source: Zacks Investment Research
Stocks to Consider
Some better-ranked stocks from the insurance space are Ryan Specialty Holdings, Inc. RYAN, Aon plc AON and Cincinnati Financial CINF, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Ryan Specialty has a decent track record of beating earnings estimates in two of the last four quarters, meeting once and missing the other one, the average being 2.37%. Year to date, RYAN has gained 10.7%.
The Zacks Consensus Estimate for Ryan Specialty’s 2023 and 2024 earnings per share is pegged at $1.39 and $1.68, indicating a year-over-year increase of 20.8% and 21.2%, respectively.
Aon has a decent track record of beating earnings estimates in two of the last four quarters while missing in the other two, the average being 0.52%. Year to date, AON has gained 8.2%.
The Zacks Consensus Estimate for Aon’s 2023 and 2024 earnings per share is pegged at $14.27 and $16.13, indicating a year-over-year increase of 6.5% and 13.09%, respectively.
Cincinnati Financial has a solid track record of beating earnings estimates in three of the last four quarters while missing in one, the average being 25.25%. Year to date, CINF has gained 0.2%.
The Zacks Consensus Estimate for CINF’s 2023 and 2024 earnings per share is pegged at $5 and $5.88, indicating a year-over-year increase of 17.9% and 17.6%, respectively.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Cincinnati Financial Corporation (CINF) : Free Stock Analysis Report
Aon plc (AON) : Free Stock Analysis Report
Brown & Brown, Inc. (BRO) : Free Stock Analysis Report
Ryan Specialty Holdings Inc. (RYAN) : Free Stock Analysis Report
