The board of directors of
Erie Indemnity Company
) approved a dividend hike on both Class A and Class B shares.
While a 7.2% dividend hike was approved for Class A shares, a
3.2% hike was approved for Class B shares.
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The company will now pay quarterly dividend of 63.5 cents per
Class A share, up from 59.25 cents paid on Jul 2013.
The newly increased dividend will be paid on Jan 22, 2014 to
shareholders of record as of Jan 7, 2013. Based on the closing
share price of $70.28 on Dec 4, the increased dividend implies a
yield of 3.6%. The current dividend yield of the company betters
the industry average of 1.85%. Erie Indemnity has a solid track
record of increasing dividend every year. Its dividend has grown
at a 5-year CAGR of about 7.3%. The last dividend hike had been
affected in November last year with the board approving a 7.2%
Based on 52.9 million shares outstanding at the end of third
quarter of 2013, the company will have to dish out around $33.6
million as quarterly dividend. Its liquidity position is sound
enough to support the pay out. The company also paid a special
dividend of $2 per share last November. Erie Indemnity has paid
dividends regularly since 1933.
Several insurers have sought approval for dividend hikes, in an
intention to boost shareholders' value. Last month, the board of
directors of property and casualty
Montpelier Re Holdings Ltd
) increased its dividend by 9% to 12.50 cents per share. Yet
another life insurer,
American Equity Investment Life Holding Company
) approved a 20% increase in its annual cash dividend to 18
cents. The board of directors of property and casualty
) intends to increase its quarterly dividend by 24% to 63 cents
There was no earnings momentum for Erie Indemnity over the last 7
days. With the news of increase in dividend, we expect analysts
to raise their estimates exerting upward pressure on the Zacks
Rank. Erie Indemnity presently carries a Zacks Rank #4