EMC Insurance Ups Dividend by 9.5% - Analyst Blog


In order to boost shareholder value, EMC Insurance Group Inc. ( EMCI ) increased its quarterly dividend by 9.5%. This translates into a quarterly cash dividend of 23 cents per share, up from 21 cents per share paid on Sep 17, 2013. The increased dividend will be paid on Dec 3, 2013, to shareholders of record as of Nov 25, 2013.

Based on the closing share price of $29.89 on Nov 15, 2013, the increased dividend implies a dividend yield of 3.08%. The current dividend yield is better than the industry yield of 1.85% and  that of some other property and casualty insurers, RLI Corp. ( RLI ) with a yield of 1.38%, ACE Limited ( ACE ) with a yield of 2.07% and Montpelier Re Holdings Ltd. ( MRH ) with a yield of 1.64%.

This dividend represents the hundred and twenty eighth consecutive quarter of dividends declared by EMC Insurance. Earlier in Nov 2012, the board of EMC Insurance approved a 5% increase in quarterly dividend to 21 cents from 20 cents.

This dividend hike represents the financial strength and long-term outlook of the company. EMC Insurance will require $3.02 million every quarter for the dividend payment, based on the outstanding share count of 13.1 million as of Sep 30, 2013. The company has ample liquidity for the payment, with total cash of $600.9 million as of Sep 30, 2013.

Moreover, the board of directors of EMC Insurance gave the nod for a reduction in the cost of the excess of loss reinsurance protection (from 9% of total assumed reinsurance premiums to 8%) provided for 2014 to the reinsurance wing of the company - EMC Reinsurance Company.  

EMC Insurance currently carries a Zacks Rank #3 (Hold). However, RLI Corp. and Montpelier both carry a favorable Zacks Rank #1 (Strong Buy) while ACE Limited carries a Zacks Rank #2 (Buy) and appear impressive.

ACE LIMITED (ACE): Free Stock Analysis Report

EMC INSURANCE (EMCI): Free Stock Analysis Report

MONTPELIER RE (MRH): Free Stock Analysis Report

RLI CORP (RLI): Free Stock Analysis Report

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Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Business , Stocks

Referenced Stocks: ACE , EMCI , MRH , RLI



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