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Radian Group (RDN) Stock on the Rise Since 12% Dividend Hike

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In a bid to enhance shareholder value, the board of directors of Radian Group Inc. RDN recently announced an increase in its dividend by 12% to 14 cents. Shareholders of record on May 24, 2021 will receive this meatier dividend on Jun 4, 2021. The company’s track record of disbursing capital appears impressive to investors. Shares of Radian gained 0.3% in the last two trading days.

Based on the closing share price of $23.53 on May 5, the raised payout represents a dividend yield of 2.1%, better than its industry’s average of nearly 1.9%. Prior to this, the company had raised quarterly dividend by 4900% to 12.5 cents per share last March.

Notably, the company’s dividend has witnessed a seven-year CAGR (2014-2021) of 83.5%.

The dividend raise is supported by the company’s strong capital structure. Its healthy balance sheet with unparalleled financial flexibility allows investment in business.

As of Mar 31, 2020, it maintained $648 million of available liquidity, which includes the company's $267.5 million unsecured revolving credit facility was $916 million as of Mar 31, 2020. Also, it extended the credit facility by 15 months to January 2022.

Radian Group’s strong capital position buoys investors’ confidence. Maintenance of capital resources at sufficient levels will provide flexibility for future business growth. The company’s cash flow also looks impressive.

The board of directors is committed to rewarding shareholders directly through cash dividends and share repurchases. During the first quarter of 2020, Radian Group repurchased shares for $226.3 million including commissions under the August 2019 share repurchase program. During the three months ended Mar 31, 2021, the company entered into a new 10b5-1 plan and resumed purchases under this program, which had been temporarily suspended in Mar 2020, in response to the COVID-19 pandemic. Currently, it has $199 million remaining under the share repurchase authorization.

Shares of this Zacks Rank #2 (Buy) company have gained almost 58.1% in the past year, underperforming the industry’s growth of 59.7%.



Recently, another insurer, RLI Corp. RLI hiked its dividend by 4.1%. Shareholders of record as of Mar 28, 2021 will receive the increased dividend on Jun 18, 2021.

Stocks That Warrant a Look

Some better-ranked stocks from the same space are Old Republic International Corporation ORI and Cincinnati Financial Corporation CINF 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 surpassed estimates in each of the last four quarters, with the average surprise being 53.01%.

Cincinnati Financial surpassed estimates in three of the last four quarters, with the average surprise being 17.63%.

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Cincinnati Financial Corporation (CINF): Free Stock Analysis Report

Radian Group Inc. (RDN): Free Stock Analysis Report

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