The board of directors of property and casualty insurer W. R. Berkley Corp. WRB has approved a 9% dividend hike representing a new annualized rate of 48 cents per share. The first increased dividend, at a quarterly rate of 12 cents, will be paid on Jul 1, to stockholders of record as of Jun 15.
W.R. Berkley Corp. has maintained its track of increasing dividend over the years. The recent dividend hike represents the tenth consecutive increase from 12 cents paid in 2005.
The dividend hike is reminiscent of W.R. Berkley Corp.’s strong balance sheet, low debt ratio and its ability to generate healthy cash flow.
Last year, the company instituted a 10% hike in its annual dividend. The company’s 5-year dividend growth rate stands at 12.4% compared with 8% for the industry.
W.R. Berkley Corp. has also increased its share repurchase authorization to its previous level of 10 million shares of common stock. The 10-million share repurchase authorization represents approximately 8% of its shares outstanding at Mar 31.
W.R. Berkley Corp. is a niche player in the insurance market and has done a decent job in navigating through tough insurance market conditions that prevailed from 2006 to 2012. During that period, the company formed many new units to equip itself for the eventual turn in the insurance market. Since the past two years, the company is witnessing continuous improvement on the back of hardened insurance rates and lower loss cost and business contribution from its newly formed business units.
We respect the company for continuing with its dividend hike trend regardless of the market vagaries. Going forward, we expect the company to continue to tread on its dividend track by virtue of its high return on equity, few intangibles, low leverage and sound underwriting discipline. Shareholder returns will continue to be positive due to dividend payouts, share repurchases and business growth.
W.R. Berkley Corp. currently carries a Zacks Rank #3 (Hold).
Other companies in the same industry that have recently jacked up their dividend payments are Assurant Inc. AIZ, The Travelers Companies TRV and ACE Limited ACE.
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