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Why Hanover Insurance Group (THG) is a Great Dividend Stock Right Now
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All investors love getting big returns from their portfolio, whether it's through stocks, bonds, ETFs, or other types of securities. But when you're an income investor, your primary focus is generating consistent cash flow from each of your liquid investments.
While cash flow can come from bond interest or interest from other types of investments, income investors hone in on dividends. A dividend is the distribution of a company's earnings paid out to shareholders; it's often viewed by its dividend yield, a metric that measures a dividend as a percent of the current stock price. Many academic studies show that dividends account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.
Hanover Insurance Group in Focus
Hanover Insurance Group (THG - Free Report) is headquartered in Worcester, and is in the Finance sector. The stock has seen a price change of 11.86% since the start of the year. Currently paying a dividend of $0.75 per share, the company has a dividend yield of 2.05%. In comparison, the Insurance - Property and Casualty industry's yield is 1.13%, while the S&P 500's yield is 1.55%.
In terms of dividend growth, the company's current annualized dividend of $3 is up 5.3% from last year. Hanover Insurance Group has increased its dividend 5 times on a year-over-year basis over the last 5 years for an average annual increase of 8.90%. Any future dividend growth will depend on both earnings growth and the company's payout ratio; a payout ratio is the proportion of a firm's annual earnings per share that it pays out as a dividend. Right now, Hanover Insurance's payout ratio is 29%, which means it paid out 29% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for THG for this fiscal year. The Zacks Consensus Estimate for 2022 is $10.55 per share, which represents a year-over-year growth rate of 20.85%.
Bottom Line
From greatly improving stock investing profits and reducing overall portfolio risk to providing tax advantages, investors like dividends for a variety of different reasons. But, not every company offers a quarterly payout.
For instance, it's a rare occurrence when a tech start-up or big growth business offers their shareholders a dividend. It's more common to see larger companies with more established profits give out dividends. During periods of rising interest rates, income investors must be mindful that high-yielding stocks tend to struggle. With that in mind, THG is a compelling investment opportunity. Not only is it a strong dividend play, but the stock currently sits at a Zacks Rank of 3 (Hold).
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Why Hanover Insurance Group (THG) is a Great Dividend Stock Right Now
All investors love getting big returns from their portfolio, whether it's through stocks, bonds, ETFs, or other types of securities. But when you're an income investor, your primary focus is generating consistent cash flow from each of your liquid investments.
While cash flow can come from bond interest or interest from other types of investments, income investors hone in on dividends. A dividend is the distribution of a company's earnings paid out to shareholders; it's often viewed by its dividend yield, a metric that measures a dividend as a percent of the current stock price. Many academic studies show that dividends account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.
Hanover Insurance Group in Focus
Hanover Insurance Group (THG - Free Report) is headquartered in Worcester, and is in the Finance sector. The stock has seen a price change of 11.86% since the start of the year. Currently paying a dividend of $0.75 per share, the company has a dividend yield of 2.05%. In comparison, the Insurance - Property and Casualty industry's yield is 1.13%, while the S&P 500's yield is 1.55%.
In terms of dividend growth, the company's current annualized dividend of $3 is up 5.3% from last year. Hanover Insurance Group has increased its dividend 5 times on a year-over-year basis over the last 5 years for an average annual increase of 8.90%. Any future dividend growth will depend on both earnings growth and the company's payout ratio; a payout ratio is the proportion of a firm's annual earnings per share that it pays out as a dividend. Right now, Hanover Insurance's payout ratio is 29%, which means it paid out 29% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for THG for this fiscal year. The Zacks Consensus Estimate for 2022 is $10.55 per share, which represents a year-over-year growth rate of 20.85%.
Bottom Line
From greatly improving stock investing profits and reducing overall portfolio risk to providing tax advantages, investors like dividends for a variety of different reasons. But, not every company offers a quarterly payout.
For instance, it's a rare occurrence when a tech start-up or big growth business offers their shareholders a dividend. It's more common to see larger companies with more established profits give out dividends. During periods of rising interest rates, income investors must be mindful that high-yielding stocks tend to struggle. With that in mind, THG is a compelling investment opportunity. Not only is it a strong dividend play, but the stock currently sits at a Zacks Rank of 3 (Hold).