The board of directors of National Interstate Corporation NATL approved a 7.8% hike in the company’s dividend. The company will now pay a quarterly dividend of 14 cents, up from 13 cents paid in Dec 2015.
The meatier dividend will be paid out on Mar 25, 2016 to shareholders of record on Mar 15. Based on yesterday’s closing price of $22.26, the annualized dividend of 52 cents per share currently has a yield of 2.5%, which is above the sector average of 2.3%.
National Interstate has a solid track of dividend hike. The last hike was approved in Feb 2015, when the company had increased its dividend by 8.3% to 13 cents per share. Dividend has grown at CAGR of 19% over the last 11 years. Notably, the property and casualty insurer has been increasing dividend since 2005 when the company went public.
With nearly 20 million shares outstanding at 2015 end, the company has to dish out about $2.8 million quarterly or $11.2 million annually for dividend payout. Its financial position, backed by a sustained solid operational performance, should support the increased payout.
National Interstate’s fourth-quarter 2015 earnings per share were in line with the Zacks Consensus Estimate. Following the earnings release, the Zacks Consensus Estimate moved south by 2.6% for 2016 and remained unchanged for 2017. With the recent hike in dividend, we not only expect analysts to pull their estimates up, but also to feel more confident about the stock. National Interstate should be an attractive pick for yield-seeking investors.
Several other insurers have also recently rewarded their shareholders with a dividend hike. Assured Guaranty Ltd AGO hiked its quarterly dividend by 8% while Allstate Corp. ALL and Argo Group International Holdings, Ltd AGII increased their payout by 10% each.
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