Erie Indemnity (ERIE) Ups Dividend by 7.1% to Share More Profits
The board of directors of Erie Indemnity Company ERIE approved a 7.1% hike in its dividend. Shareholders of record as of Jan 5, 2023, will receive the meatier dividend on Jan 20, 2024.
With the approval, the new payout stands at $1.275 per Class A share compared with the earlier payout of $1.19 per share and $191.25 per Class B share compared with the earlier payout of $178.50 per share. Erie Indemnity has been paying dividends since 1933. Based on the stock’s Dec 6, 2023, closing price of $301.40, the new dividend on Class A shares will yield 1.7%, which is better than the industry’s average of 1.1%.
Banking on its operational strength that ensures smooth cash flow, Erie Indemnity has increased dividends each year, reflecting the commitment to return value to its shareholders.
A solid capital position and balance sheet strength continue to support effective capital deployment. It exited the third quarter with a surplus position of 9.1 billion. Apart from hiking dividends, Erie Indemnity occasionally pays special dividends and buys back shares.
Improvement in premiums of homeowners and commercial multi-peril products given continued rate increase and strong retention, strengthening of business platforms, as well as identification and development of new sources of revenues, should help this Zacks Rank #1 (Strong Buy) insurer sustain dividend hikes. You can see the complete list of today’s Zacks #1 Rank stocks here.
Shares of Erie Indemnity have rallied 21.2% year to date, outperforming the industry’s increase of 14.8%.
Image Source: Zacks Investment Research
Given a solid capital level in the insurance industry and an improving operating backdrop favoring strong operational performance, insurers like Assurant Inc. AIZ, The Hanover Insurance Group, Inc. THG and RLI Corporation RLI have resorted to effective capital deployment to enhance shareholders’ value.
In November 2023, Assurant’s board approved a 3% hike in its quarterly dividend. The recent hike marked the 19th consecutive dividend increase by Assurant since its initial public offering in 2004. Effective capital deployment highlights AIZ’s commitment toward prudent capital management, reflecting its sustained operational performance over a period of time and its sound financial prospects.
RLI’s board of directors approved a special cash dividend of $2.00 per share, marking the 14th straight special dividend. This insurer has also been paying dividends for 187 consecutive quarters and increased regular dividends in the last 48 straight years. Its dividends increased at a seven-year (2016-2023) CAGR of 3.9%. RLI’s dividend yield of 0.8% is better than the industry average of 0.3%. Over the last 10 years, the P&C insurer’s total cumulative dividends amounted to more than $1.37 million, supported by sufficient liquidity and strong cash flow.
The board of directors of Hanover Insurance approved a 5% hike in its quarterly dividend to 85 cents. Banking on operational excellence, Hanover Insurance has increased dividends for the 19th straight year. Growth in the Core Commercial and Specialty segments, higher retention, improved pricing, loss control, risk prevention measures and a strong market presence should help the insurer maintain the streak. The insurer aims for a long-term return on equity target of 14% or higher by 2026.
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
RLI Corp. (RLI) : Free Stock Analysis Report
Assurant, Inc. (AIZ) : Free Stock Analysis Report
The Hanover Insurance Group, Inc. (THG) : Free Stock Analysis Report
Erie Indemnity Company (ERIE) : Free Stock Analysis Report
