Dividend Increase at W.R. Berkley Corp. - Analyst Blog
The board of directors of property and casualty insurer, W.R. Berkley Corp. ( WRB ) has approved a 10% dividend hike representing a new annualized rate of 44 cents per share. The first increased dividend, at a quarterly rate of 11 cents, will be paid on Jul 1, 2014 to stockholders of record as of Jun 10, 2014.
W.R. Berkley Corp. has maintained its track record of increasing dividends over the years. The latest hike represents the ninth consecutive increase from 12 cents paid in 2005.
The dividend hike is reminiscent of the insurer's strong balance sheet, low debt ratio and ability to generate healthy cash flow.
Last May, the company instituted an 11% hike in its annual dividend. W.R. Berkley's 5-year dividend growth rate stands at 10.6% compared with 9.3% for the industry. Nevertheless, W.R. Berkley Corp. is one such company in the U.S. property and casualty industry that has a low dividend yield (0.91% compared with 2.29% for industry).
W.R. Berkley Corp. is a niche player in the insurance market and has done a decent job in navigating the tough insurance market conditions that prevailed from 2006 to 2012. During that period, the company formed many new units to equip itself for the eventual turn in the insurance market. Since the past two years, the company is witnessing continuous improvement from hardening of insurance rates and reduction in loss cost as well as business contribution from newly formed business units.
We appreciate the company for continuing its dividend hike trend regardless of the market vagaries. Going forward, we expect the company to continue to tread on its dividend track by virtue of its high return on equity, few intangibles, low leverage and sound underwriting discipline. We are quite optimistic on W.R. Berkley Corp.'s stock at this moment. Shareholder returns will continue to be positive due to dividend payouts, share repurchases and business growth.
W.R. Berkley Corp. currently retains a Zacks Rank #1 (Strong Buy).
Other companies in the same industry that have recently jacked up their dividend payments include Assurant Inc. ( AIZ ), The Travelers Companies ( TRV ) and ACE Limited ( ACE ).
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