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The share price of Brown & Brown Inc. (BRO - Snapshot Report) has been on an uptrend following the news of dividend increase. Share prices increased 2% to close at $33.24 on Oct 18, 2013. The board of directors of the company approved 11.1% increase in its quarterly dividend.

The insurance broker will now pay a quarterly cash dividend of 10 cents, up from 9 cents paid on Aug 14, 2013. The newly increased dividend will be paid on Nov 13, 2013 to the shareholders of record as of Oct 30, 2013.

Based on the closing share price of $33.24 on Oct 18, the increased dividend implies a yield of 1.2%. The current dividend yield of Brown & Brown Inc. is better than another insurance broker Aon plc’s (AON - Analyst Report) yield of 0.9%.

The dividend hike was primarily supported by Brown & Brown Inc.’s strong balance sheet and its ability to generate healthy cash flow, which in turn, is owing to its continued solid operational performance across all four business divisions. Cash and cash equivalents at the end of the third quarter of 2013 stood at nearly $171 million. Based on about 143 million shares outstanding, the company will have to dish out nearly $14.3 million as quarterly dividend.

With the recent approval, the company marks the 20th consecutive year of dividend increase. In Oct 2012, the board had approved a 5.9% increase, raising the dividend to 9 cents from 8.5 cents.

Brown & Brown Inc. presently carries a Zacks Rank #3 (Hold). With the recent news announcement, we expect analysts to raise their estimates exerting upward pressure on the Zacks Rank. Among others in the insurance space, insurance broker Validus Holdings Ltd. (VR - Snapshot Report) with a Zacks Rank #2 (Buy), and property & casualty insurer Alleghany Corp. (Y - Snapshot Report) with a Zacks Rank #1 (Strong Buy), appear impressive.

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