Property and casualty insurer, Cincinnati Financial Corp. ( CINF) has announced a 3.1% hike in its quarterly dividend to 42 cents per share. The increased dividend will be paid on Oct 15, 2013, to shareholders of record as of Sep 18, 2013.
Following this dividend hike, shares of Cincinnati Financial will yield approximately 3.5%, which is ahead of the industry’s dividend yield of 2.06%
Management has increased the dividend every year for the past 52 years, with 5 year dividend growth rate of 2.67%.
Cincinnati Financial’s annual dividend comes to $1.68 per share. The company last made a 0.5 cent hike in its quarterly dividend to 40.75 cents per share in Aug 2012.
The continuous dividend payment is supported by Cincinnati Financial strong capital and continuous cash flow generation. The company had $13.315 billion in consolidated cash and invested assets at June 30, 2013, up 2% from $13.021 billion at year-end 2012. Its inherent capital strength can also be testified by its low debt-to-capital ratio which was 13.6% as of Jun 30, 2013, compared with 14.1% at the end of 2012.
Cincinnati Financial is committed to rewarding shareholders directly through cash dividends and by authorizing share repurchases. We are impressed by the company’s efforts to maintain the trend even in the midst of the soft property and casualty insurance market when it was facing top line growth pressure. Now that the property and casualty insurance market pricing has improved substantially, and the company is witnessing a good growth in most of its business lines, we are confident to see a higher magnitude of dividend increase, going forward.
We believe that in the near term, the stock will be helped by dividend increases and stock buyback activities, along with good business growth.
Cincinnati Financial ranks among the top 25 leading U.S. property and casualty insurers, and carries an A+ rating from A.M. Best.
Cincinnati financial currently retains a Zacks Rank #3 (Hold). Other players HCI Group Inc. ( HCI), Everest Re Group Ltd. ( RE), State Auto Financial Corp. ( STFC) all carry favorable Zacks Rank #1 (Strong Buy) and look impressive.
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