WF vs. BEN: Which Stock Should Value Investors Buy Now?
In its concerted effort to share more profits with shareholders, the board of directors of United Fire Group Inc. UFCS has approved a quarterly dividend hike by 10.7%. The company will now pay a dividend of 31 cents per share, up from 28 cents payable Mar 22, 2018. Shares of the company gained 3.4% in the last couple of trading sessions, reflecting investor confidence in the stock.
Based on the closing price of $52.81 as of May 17, the annualized dividend of $1.24 yields 2.35%, substantially better than the industry average of 0.48%. Shareholders of record as of Jun 1, 2018 will receive the increased dividend amount on Jun15.
United Fire Group boasts an impressive track of paying dividend for the last 200 consecutive quarters. The company has been consistently hiking its dividend since 2014 at a four-year CAGR of 14.6%. With about 25.8 million shares outstanding at the end of the first quarter, the company has to dish out about $7.9 million quarterly or $31.6 million annually as dividend. This payout trend is supported by the company’s sustained solid operational performance to enhance its shareholder value.
United Fire Group flaunts a solid capital deployment policy in place. Apart from raising dividends each year, the company engages in regular share repurchases, lowering the share count and in turn, boosting the bottom line. The company has 2.1 million shares remaining under its share repurchase program, slated to expire in August 2018.
In fact, the insurer is contemplating the approval of an extraordinary special dividend. Pending approval of the Departments of Insurance, the company expects to announce the same in the next three to six months. Shares of the company have rallied 15.96% year to date, outperforming the industry’s loss of 0.36%. We expect the company’s initiative to improvement commercial and personal auto lines of business, prudent risk control and analytics plus an effective capital deployment to help the stock carry on with its bull run.
Dividend hikes seem a well-accepted strategy among companies to solidify investor confidence in their stocks. Recently, the board of directors of CNO Financial Group, Inc. CNO cleared its quarterly dividend raise by 11% while Chubb Corporation CB increased its dividend by 3%. Apart from a strong quarterly performance by the companies and a lower tax incidence owing to the implementation of the new tax rate, scope for capital deployment has grown.
Stocks to Consider
Two stocks worth considering from the property and casualty industry are Alleghany Corporation Y and RLI Corp. RLI, both sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Operating in the Reinsurance and Insurance segments, Alleghany Corporation (Y) offers related services in the United States as well as internationally. The company came up with an average four-quarter positive earnings surprise of 17.61%.
RLI Corp. (RLI) is an insurance holding company, underwriting property and casualty insurance in the United States and internationally. The company delivers an average four-quarter beat of 33.65% .
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.
Click here for the 6 trades >>
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
CNO Financial Group, Inc. (CNO) : Free Stock Analysis Report
RLI Corp. (RLI) : Free Stock Analysis Report
Chubb Limited (CB) : Free Stock Analysis Report
Alleghany Corporation (Y) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research