American Financial Group, Inc.
) declared a special dividend of 25 cents per share payable on
December 24, 2012 to shareholders of record as of December 17,
2012. This implies a dividend yield of 0.63%, based on the
closing price of $39.97 as of December 6, 2012.
This one-time cash dividend will lead to an expenditure of $23
million for American Financial. However, the company generated
operating cash flows of $487 million in the first nine months of
2012, which is more than adequate to cover the expenditure for
the special dividend. Moreover, the company's cash and cash
equivalents surged 22.8% year over year to $1.63 billion as of
September 30, 2012.
American Financial's sturdy financials and future prospects
enable it to return capital to shareholders via dividends and
share repurchases, thereby boosting shareholders' confidence in
the stock. Moreover, efficient capital management helps the
company sustain its risk-adverse capital structure, while
maintaining adequate capital flexibility required for growth.
American Financial consistently returns value to shareholders.
Apart from paying dividends regularly, the company has a track
record of raising its dividend each year.
In October this year, the company announced an 11.4% hike in
its regular quarterly dividend to 19.5 cents from 17.5 cents paid
earlier. The increased dividend was paid on October 25 to
shareholders of record as of October 15. Even in October 2011,
the company approved an 8% dividend hike to 17.5 cents from 16.25
American Financial currently carries a Zacks #3 Rank (Hold).
We maintain a long-term 'Neutral' recommendation on the stock.
The company's peer in the property and casualty business -
Cincinnati Financial Corp.
) - carries a Zacks #2 Rank (Buy).
AMER FINL GROUP (AFG): Free Stock Analysis
CINCINNATI FINL (CINF): Free Stock Analysis
To read this article on Zacks.com click here.