The board of directors of StanCorp Financial Group Inc. (SFG) approved 18% increase in its annual cash dividend. The life insurer will now pay an annual dividend of $1.10 per share, up from 93 cents per share paid on Dec 7, 2012. The newly declared dividend will be paid on Dec 9, 2013 to shareholders of record as on Nov 25, 2013.
Following the news of the dividend increase, share price of StanCorp inched up 1.7% to close at $63.58 per share on Nov 13.
Based on yesterday’s closing share price, the increased dividend of StanCorp implies a yield of 1.73%. The current yield is better than that of other life insurers, American Equity Investment Life Holding Co. (AEL) (yield of 0.69%) and Lincoln National Corp. (LNC) (yield of 0.98%). Moreover, the 5-year average dividend yield of StanCorp presently stands at 2.11%, which is higher than the industry yield of 1.32%.
The dividend hike of StanCorp was primarily supported by its consolidated capital position and bottom-line growth, which resulted from increased favorable claims experience in the group insurance business and higher earnings in the company’s Asset Management segment. The increasing cash balance of the company also supported the approval.
StanCorp exited the third quarter with cash and cash equivalents of $345.4 million, significantly up from $160.7 million as of Dec 31, 2012. Based on about 44.1 million shares outstanding, the company will have to dish out roughly $49.1 million as annual dividend.
With the recent approval, the company marks the 14th consecutive annual increase in dividend. Prior to this, in Nov 2012 the board had approved a 4.5% increase, raising the dividend to 93 cents per share from 89 cents.
StanCorp presently carries a Zacks Rank #1 (Strong Buy). With the recent news announcement, we expect analysts to raise their estimates. Among others in the space, China Life Insurance Co. Ltd. (LFC) with a Zacks Rank #2 (Buy) appears impressive.
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