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RenaissanceRe Holdings Ltd.’s RNR board of directors recently approved a 2.9% hike in the quarterly dividend in a bid to enhance shareholder value. Following this move, the payout now stands at 36 cents per share compared with the prior payout of 35 cents. Shares of RenaissanceRe have gained 1.1% in the last day’s trading as of Feb 8.
The dividend, which denoted the 26th straight year of dividend hike, will be paid on Mar 31, 2021 to shareholders of record as on Mar 15.
Prior to the recent hike, the company had raised quarterly dividend by 2.9% to 35 cents per share last year in February.
Notably, the company has grown its dividend at a eight-year CAGR of 3.2%. Based on the stock’s Feb 8 closing price of $161.13, its dividend yield of 0.9% compares favorably with the industry’s figure of 0.6%.
Apart from raising dividend, the property & casualty (P&C) insurer also buys back shares. However, the COVID-19 induced market volatilities had left most insurance companies with no other option than to temporarily halt their share buyback programs. In fact, RenaissanceRe was no exception to the trend and suspended its share buyback activities in March 2020.
The only time the company resorted to share buybacks during 2020 was in the first quarter when it bought back 406,000 common shares worth $62.6 million. The company had $437.4 million remaining under its buyback program as of Dec 31, 2020.
Nevertheless, it’s worth mentioning that the company has recommenced share buybacks in first-quarter 2021 courtesy of gradual recovery across markets. From the period after Dec 31, 2020 till Feb 4, 2021, RenaissanceRe bought back 250,169 common shares worth $38.7 million. These initiatives clearly hint toward the operational and financial strength of the company.
A solid liquidity standing as evident from a strong balance sheet has enabled RenaissanceRe to support not only growth initiatives but also has paved the way for accelerated and prudent capital deployment measures. The company had $1.7 billion in cash and cash equivalents at the end of fourth-quarter 2020, which climbed 25.9% from 2019-end.
Shares of RenaissanceRe have lost 19.2% in a year compared with the industry’s decline of 3.7%. Nevertheless, we believe the company’s divestitures to streamline operations and buyouts for expanding business are likely to drive its shares in the days ahead.
Notably, the company has a Zacks Rank #4 (Sell).
Stocks to Consider
Some better-ranked stocks in the same space are The Travelers Companies, Inc. TRV, Selective Insurance Group, Inc. SIGI and Alleghany Corporation Y, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Travelers, Selective Insurance and Alleghany have a trailing four-quarter earnings surprise of 15.47%, 13.18% and 34.08%, on average, respectively.
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The Travelers Companies, Inc. (TRV) : Free Stock Analysis Report
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