In a concerted effort to boost its shareholders value, the Board
of Directors of
American Financial Group Inc.
) approved a dividend hike of 11.4%. American Financial will now
pay a quarterly dividend of 19.5 cents per share, up from 17.5
cents paid on July 25, 2012. The increased dividend will be paid on
October 25 to shareholders of record as of October 15.
American Financial has had a consistent track record of paying
quarterly dividends and the current dividend is not an exception.
Also, it has a history of raising its dividend each year. The last
dividend hike was approved in October 2011, increasing 8% to 17.5
cent from 16.25 cents. Based on the closing share price of $37.61
on October 1, the increased dividend implies a dividend yield of
2.1%, compared with the earlier yield of 1.9%.
Based on 98 million shares outstanding as of June 30, 2012, the
company requires $19.1 million for the payment of the quarterly
dividend. Meanwhile, American Financial generated cash flow from
operations of $226 million in the first half of 2012, which is more
than adequate to cover the dividend payment. Also, its cash and
cash equivalents at second quarter end increased 15% over 2011 end
level. These sturdy financials well support the company's dividend
Over the last 7 days, there has been no movement in estimates. We
believe the company's effort to return more value to shareholders
might encourage analysts to pull their estimates upward. The Zacks
Consensus Estimate for third-quarter 2012 and full year 2012 are 62
cents per share and $3.20 per share, respectively.
American Financial Group currently holds a Zacks #3 Rank,
translating into short term hold rating.
The Travelers Companies Inc.
), which closely competes with the company, shares the same Zacks
AMER FINL GROUP (AFG): Free Stock Analysis
TRAVELERS COS (TRV): Free Stock Analysis Report
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