) announced the authorization of a 2:1 stock split along with a
special dividend of $2.50 per share. Additionally, the company
will pay a regular quarterly dividend of 25 cents per share to
Both the cash dividends (regular and special) and the stock
dividend will be paid on December 27, 2012 to shareholders of
record as of December 17, 2012. Usually, ProAssurance pays the
regular dividend for the fourth quarter in January each year.
Both the cash dividends will be paid on the increased number
of outstanding shares following the stock split. Thus, while the
per-share quarterly dividend remains the same as earlier,
ProAssurance's total dividend payment will double due to the
doubling of outstanding shares.
Considering ProAssurance's closing share price of $90.30 as of
December 4, 2012, the post-split quarterly dividend translates
into an annualized dividend yield of 2.2%. However, the dividend
policy, which involves a payment of $1 per share annually, is not
obligatory. The board of ProAssurance will study the company's
financials and its future outlook before taking a final decision
about its future dividend payments.
Management considers the stock split and dividend payment to
be ideal actions considering the present market scenario. While
returning capital to shareholders at present, these transactions
will leave enough capital flexibility to permit acquisitions and
share buybacks in the future.
The stock split should make ProAssurance's shares more
affordable, thereby boosting its liquidity. This in turn should
enhance the trading volume of these shares.
ProAssurance carries a Zacks #2 Rank (Buy). We retain our
long-term 'Neutral' recommendation on the shares.
EMC Insurance Group Inc.
) - another operator in the property and casualty industry -
carries a Zacks #1 Rank (Strong Buy).
EMC INSURANCE (EMCI): Free Stock Analysis
PROASSURANCE CP (PRA): Free Stock Analysis
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