In an effort to distribute more profit among shareholders, the board of directors of Assurant Inc. (AIZ) authorized an increase of 19% in its dividend. The company will now pay a quarterly dividend of 25 cents per share, up from 21 cents per share paid earlier.
The newly increased dividend will be paid on Jun 11, 2013 to the shareholders of record as of May 28, 2013. Based on the closing share price of $47.37 on May 10, the increased dividend implies a dividend yield of 2.1%. It is better than the industry yield 1.53% and few other multi-line insurers – Cigna Corp. (CI) with a yield of 0.1%, CNO Financial Group Inc. (CNO) with a yield of 1.0% and Assured Guaranty Ltd. (AGO) with a yield of 1.7%.
Assurant has been consistently increasing its dividend over the years. The current hike marks the 10th straight year of increase in the quarterly dividend. The dividend hike was primarily supported by Assurant’s strong balance sheet and its ability to generate healthy cash flow. The previous hike was authorized in May 2012, when the board approved a 16.7% increase in dividend. Over the last 5 years, Assurant’s quarterly dividend payout has more than doubled.
Based on the 80.9 million shares outstanding as of Mar 31, 2013, the company requires $20.2 million for the payment of the quarterly dividend. Cash balance at the end of the first quarter stood at $1.6 billion (up 76% from 2012-end level), sufficient to meet the additional requirement.
Besides dividend increase, the property and casualty insurer buys back share. Assurant spent $26.6 million to repurchase 0.6 million shares in the first quarter of 2013. In total, it had returned $43.4 million to its shareholders via dividends and share repurchases. Subsequent to the first quarter, Assurant also bought another 1.5 million shares for $69 million.
Assurant carries a Zacks Rank #3 (Hold).
ASSURED GUARNTY (AGO): Free Stock Analysis Report
ASSURANT INC (AIZ): Free Stock Analysis Report
CIGNA CORP (CI): Free Stock Analysis Report
CNO FINL GRP (CNO): Free Stock Analysis Report
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