The board of directors of
The Hanover Insurance Group Inc.
) has approved a 12.1% increase in its quarterly dividend. This
property and casualty insurer will now pay a quarterly cash
dividend of 37 cents per share, up from 33 cents paid on Sep 27,
2013. The newly increased dividend will be paid on Dec 27, 2013
to shareholders of record as of Dec 16, 2013.
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HANOVER INSURAN (THG): Free Stock Analysis
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Shares of the company gained 1.2% during the trading hours to
close at $60.99 on Dec 6, 2013.
Hanover has been increasing its dividend over the last 15 years.
It has increased its dividend at a 4-year CAGR of 10.3%. Its
previous dividend hike was effectuated in December last year,
wherein the board had approved a 10% increase, raising the
quarterly dividend to 33 cents from 30 cents.
The current dividend hike is primarily supported by Hanover's
strong operational performance across most of its business lines,
and its improved underwriting results. A healthy cash balance
also aids the increase in dividend. Hanover exited the third
quarter of 2013 with cash and cash equivalents of $602.2 million,
up 6.6% from the 2012-end level. Based on its 44.6 million shares
outstanding as of Sep 30, 2013, Hanover will have to dish out
nearly $16.5 million as quarterly dividend.
Based on the closing share price of $60.99 on Dec 6, the
increased dividend implies a yield of 2.4%. The current dividend
yield of Hanover is better than the industry yield of 1.9% and is
in line with the sector yield.
No earnings momentum has been witnessed over the last 7 days. As
a result, the Zacks Consensus Estimate for 2013 and 2014 remained
at $4.79 and $4.67 per share, respectively. However, we expect
the news of this dividend increase to encourage analysts to
eventually pull up their estimates. Hanover presently carries a
Zacks Rank #1 (Strong Buy).
Several insurers are treading the same path as Hanover. They
foresee dividend hikes as strategies to retain investor
confidence as well as attract new investors. In November,
property and casualty insurer
Montpelier Re Holdings Ltd.
) approved a 9% increase in its quarterly dividend to 12.50 cents
per share, while the board of directors of
Everest Re Group Ltd.
) increased its quarterly dividend by 56% to 75 cents per share.
HCI Group Inc.
) increased its dividend by 22.2% to 27.50 cents per share.