Protective Life Corp.
) has announced an 11% increase in its quarterly dividend. The
new dividend of 20 cents per share will be paid on Jun 10, 2013
to share owners of record at the close of business on May 24,
Last year the company announced a dividend increase of 12.5%.
At the increased level the company dividend yield stands at 2.0%,
based on the closing price of $39.23 on May 15. This compares
favourably with industry average of 1.5%
Protective's increased dividend is backed by the company's
strong cash flows and a solid balance sheet. Sufficient financial
flexibility has also enabled the company to return capital to its
shareholders via share buyback.
Protective is one of the major players in the life insurance
industry. It has been changing its sales mix to improve life
insurance margins and reduce interest rate exposure.
We expect Protective to benefit from the changing demographic
pattern in America where a large proportion of the population is
aging. It thus generates greater demand for retirement savings
products. We expect this trend will drive strong earnings growth
in this business, given that Protective is already
witnessing strong variable annuity sales and increased
Protective has a long history of successfully acquiring both
closed blocks of business and small companies. It has been
traditionally successful in generating operating efficiencies
along with increasing business scale via these acquisitions.
Going forward we expect more such deals to be sealed by the
company, given sufficient cash in hand.
We believe its strong operating fundamentals will enable it to
make increasing dividend payments to its shareholders in
Other players in the same field include
StanCorp Financial Group
) with Zacks Rank #1 (Strong Buy),
China Life Insurance Co. Ltd.
Prudential Financial Inc.
) both with Zacks Rank #2 (Buy), are worth considering.
CHINA LIFE INS (LFC): Free Stock Analysis
PROTECTIVE LIFE (PL): Free Stock Analysis
PRUDENTIAL FINL (PRU): Free Stock Analysis
STANCORP FNL CP (SFG): Free Stock Analysis
To read this article on Zacks.com click here.