HCC Insurance Hikes Dividend by 36% - Analyst Blog


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In an effort to distribute more profit among shareholders, the board of directors of HCC Insurance Holdings, Inc. ( HCC ) increased its dividend by 36.4%. The company will now pay a quarterly dividend of 22.50 cents per share, up from 16.50 cents paid on Jul 15, 2013.

The newly increased dividend will be paid on Oct 15, 2013 to the shareholders of record as of Oct 1, 2013. Based on the closing share price of $43.34 on Aug 21, the increased dividend implies a dividend yield of 2.1%. The current dividend yield is better than other property and casualty insurers Everest Re Group Ltd .'s ( RE ) yield of 1.4% and State Auto Financial Corp. ( STFC ) with a yield of 2.0%.

The dividend hike was primarily supported by HCC Insurance's strong balance sheet and its ability to generate healthy cash flow, which is supported by its continued solid operational performances. Based on the 99.1 million shares outstanding as of Jun 30, 2013, HCC Insurance requires $22.1 million for the payment of the quarterly dividend. Cash balance at the end of the second quarter stood at nearly $39.3 million while cash from operations in the first half totaled $102 million.

With the recent approval, HCC Insurance has increased dividend for the 17th consecutive year. Earlier, in Aug 2012, the board had approved a 6.5% increase, raising the dividend to 16.5 cents from 15.5 cents.

Besides increasing dividend, the company also engages in share repurchase to enhance its shareholders value. In the first six months of 2013, HCC Insurance spent $40.9 million to buy back 1 million shares. The company is left with $208.9 million under its authorization. In August last year, the board also authorized a buyback program worth $300 million.

HCC Insurance carries a Zacks Rank #3 (Hold). HCI Group, Inc. ( HCI ) with Zacks Rank #1(Strong Buy) is also worth taking a look.

HCC INS HLDGS (HCC): Free Stock Analysis Report

HCI GROUP INC (HCI): Free Stock Analysis Report

EVEREST RE LTD (RE): Free Stock Analysis Report

STATE AUTO FINL (STFC): Free Stock Analysis Report

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

This article appears in: Investing , Business , Stocks
More Headlines for: HCC , HCI , RE , STFC

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