In order to boost shareholders value, Old Republic International Corporation (ORI) increased its quarterly dividend by 1.4%. This translates into a quarterly cash dividend of 18.25 cents per share, up from 18 cents per share paid on Dec 16, 2013. The increased dividend will be paid on Mar 14, 2014, to shareholders of record as of Mar 4, 2014.
The news boosted investor sentiment, driving share price 0.8% in the day’s trading session. Shares closed at $15.41 on Feb 21, 2014.
Based on the closing share price, the increased dividend implies a dividend yield of 4.7%. The current dividend yield is better than the industry yield of 2.05% and that of some other multiline insurers, Radian Group Inc. (RDN) with a yield of 0.06%, American International Group, Inc. (AIG) with a yield of 1.02% and Assured Guaranty Ltd. (AGO) with a yield of 1.91%.
With this hike, the current annual dividend equates to 73 cents per share, up from 72 cents paid in 2013. This dividend represents the 33rd annual hike in dividends paid by Old Republic. The company has increased its dividend at an eight-year CAGR of 3.4%.
The consistent dividend hikes represent the financial strength and long-term outlook of the company. Old Republic has been consistently paying dividends since 1941. The company has ample liquidity for the payment, with cash flow from operations of $686.7 million at year-end 2013, comparing favorably with $532 million at end-2012.
Old Republic currently carries a Zacks Rank #1 (Strong Buy). Investors interested in the insurance industry may also consider Radian with a Zacks Rank #2 (Buy).
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