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American Financial (AFG) Boosts Quarterly Dividend by 12.7%
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American Financial Group (AFG - Free Report) recently announced a substantial increase in its annual common stock dividend, showcasing its commitment to rewarding its shareholders. This move is a testament to the insurer’s strong financial position and long-term growth prospects.
Approved by the board of directors, the regular annual dividend has now been increased to $3.20 per share of common stock from $2.84. This increment represents a remarkable 12.7% rise over the previously declared rate. From October 2024, the increased dividend will be disbursed quarterly at a rate of 80 cents per share of common stock.
Based on the closing price of $128.13 as of Aug 20, the company’s dividend yield is 2.1%, which is much above the industry average of 0.2%. This makes the stock an attractive pick for yield-seeking investors.
Notably, the 10-year compound annual growth rate for the company's regular annual dividends stands at an impressive 12.4%. This track record underscores its prudent financial management and stability.
Financial Strength and Capital Management
American Financial has traditionally maintained a moderate adjusted financial leverage of around 20%, with a good cash flow and interest coverage ratio. AFG continued to have significant excess capital as of Jun 30, 2024. As of the same date, the parent company held approximately $438 million in cash and investments. American Financial scores strongly with credit rating agencies. Also, in each of the last 18 years, the insurer has successfully increased its dividends.
During the second quarter of 2024, the insurer returned $59 million to shareholders through the payment of regular quarterly dividend. The company also paid a special dividend of $2.50 per share. The aggregate amount of this special dividend will be approximately $209 million. This reflects its commitment to delivering value to shareholders. The robust operating profitability at the P&C segment, a stellar investment performance and effective capital management support effective shareholders return. AFG expects its operations to continue to generate significant excess capital throughout the remainder of 2024, which provides ample opportunity for additional share repurchases or special dividends over the next year.
Return on equity, a profitability measure of how efficiently a company utilizes its shareholders' money, was 21.6% in the trailing 12 months, compared favorably with the industry average of 7.9%.
Zacks Rank and Price Performance
American Financial carries a Zacks Rank #3 (Hold) at present. Shares of AFG have gained 14.4% in a year compared with the industry’s growth of 27.5%.
Image Source: Zacks Investment Research
Another Insurer on the Same Path
MGIC Investment Corporation’s (MTG - Free Report) board of directors approved a 13% hike in its quarterly dividend to return more profits to stockholders. The insurer will pay out 13 cents per share compared with the previous payout of 12 cents.
The insurer distributes wealth to its shareholders via dividend increases and share buybacks. This reflects continued strong mortgage credit performance and financial results and share price valuation levels that is expected to be attractive to generate long-term value for remaining shareholders. By virtue of capital contribution, reinsurance transaction and improving cash position, MTG has significantly improved its capital position. Its strong liquidity not only mitigates balance sheet risks but also paves the way for accelerated capital deployment.
NMI Holdings’ earnings surpassed estimates in each of the last four quarters, the average surprise being 10.15%. Shares of NMIH have jumped 37.8% in a year. The Zacks Consensus Estimate for NMIH’s 2024 and 2025 earnings implies year-over-year growth of 15.6% and 5.5%, respectively.
Arch Capital’s earnings surpassed estimates in each of the last four quarters, the average surprise being 28.93%. Shares of ACGL have jumped 40.3% in a year. The Zacks Consensus Estimate for ACGL’s 2024 and 2025 earnings implies year-over-year growth of 6.5% and 2.5%, respectively.
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American Financial (AFG) Boosts Quarterly Dividend by 12.7%
American Financial Group (AFG - Free Report) recently announced a substantial increase in its annual common stock dividend, showcasing its commitment to rewarding its shareholders. This move is a testament to the insurer’s strong financial position and long-term growth prospects.
Approved by the board of directors, the regular annual dividend has now been increased to $3.20 per share of common stock from $2.84. This increment represents a remarkable 12.7% rise over the previously declared rate. From October 2024, the increased dividend will be disbursed quarterly at a rate of 80 cents per share of common stock.
Based on the closing price of $128.13 as of Aug 20, the company’s dividend yield is 2.1%, which is much above the industry average of 0.2%. This makes the stock an attractive pick for yield-seeking investors.
Notably, the 10-year compound annual growth rate for the company's regular annual dividends stands at an impressive 12.4%. This track record underscores its prudent financial management and stability.
Financial Strength and Capital Management
American Financial has traditionally maintained a moderate adjusted financial leverage of around 20%, with a good cash flow and interest coverage ratio. AFG continued to have significant excess capital as of Jun 30, 2024. As of the same date, the parent company held approximately $438 million in cash and investments. American Financial scores strongly with credit rating agencies. Also, in each of the last 18 years, the insurer has successfully increased its dividends.
During the second quarter of 2024, the insurer returned $59 million to shareholders through the payment of regular quarterly dividend. The company also paid a special dividend of $2.50 per share. The aggregate amount of this special dividend will be approximately $209 million. This reflects its commitment to delivering value to shareholders. The robust operating profitability at the P&C segment, a stellar investment performance and effective capital management support effective shareholders return. AFG expects its operations to continue to generate significant excess capital throughout the remainder of 2024, which provides ample opportunity for additional share repurchases or special dividends over the next year.
Return on equity, a profitability measure of how efficiently a company utilizes its shareholders' money, was 21.6% in the trailing 12 months, compared favorably with the industry average of 7.9%.
Zacks Rank and Price Performance
American Financial carries a Zacks Rank #3 (Hold) at present. Shares of AFG have gained 14.4% in a year compared with the industry’s growth of 27.5%.
Image Source: Zacks Investment Research
Another Insurer on the Same Path
MGIC Investment Corporation’s (MTG - Free Report) board of directors approved a 13% hike in its quarterly dividend to return more profits to stockholders. The insurer will pay out 13 cents per share compared with the previous payout of 12 cents.
The insurer distributes wealth to its shareholders via dividend increases and share buybacks. This reflects continued strong mortgage credit performance and financial results and share price valuation levels that is expected to be attractive to generate long-term value for remaining shareholders. By virtue of capital contribution, reinsurance transaction and improving cash position, MTG has significantly improved its capital position. Its strong liquidity not only mitigates balance sheet risks but also paves the way for accelerated capital deployment.
Stocks to Consider
Some better-ranked stocks from the property and casualty insurance industry are NMI Holdings Inc (NMIH - Free Report) and Arch Capital Group Ltd. (ACGL - Free Report) , each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
NMI Holdings’ earnings surpassed estimates in each of the last four quarters, the average surprise being 10.15%. Shares of NMIH have jumped 37.8% in a year. The Zacks Consensus Estimate for NMIH’s 2024 and 2025 earnings implies year-over-year growth of 15.6% and 5.5%, respectively.
Arch Capital’s earnings surpassed estimates in each of the last four quarters, the average surprise being 28.93%. Shares of ACGL have jumped 40.3% in a year. The Zacks Consensus Estimate for ACGL’s 2024 and 2025 earnings implies year-over-year growth of 6.5% and 2.5%, respectively.