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Recently, the board of CNO Financial Group Inc. (CNO - Analyst Report) announced a 50% hike in its quarterly cash dividend to 3 cents a share from 2 cents paid earlier. The increased dividend will be paid on Jun 24, 2013 to shareholders of record as of Jun 10.

The increased dividend implies an annual yield of 1% per share based on CNO Financial’s closing share price of $11.97 as of May 8, 2013. The old dividend amounted to a yield of 0.67%.

CNO Financial will require $6.7 million every quarter to finance the new dividend, based on the outstanding share count of 223.5 million as of Mar 31, 2013. The company has ample financial resources for this purpose, with unrestricted cash and cash equivalents of $251.6 million as of Mar 31, 2013.

CNO Financial’s strong organic growth and excess capital generation allowed it to follow an active capital deployment policy. The company expects to spend $250–$300 million each on share buybacks and dividend payouts in 2013.

The regular capital deployment and dividend hike reflect management’s confidence in the financial strength of CNO Financial. This was reflected in the company’s initiation of a quarterly cash dividend of 2 cents per share in May 2012.

CNO Financial currently carries a Zacks Rank #2 (Buy). Other stocks in the insurance sector that are worth a look are AEGON N.V. (AEG - Snapshot Report), Eastern Insurance Holdings, Inc. and Cigna Corp. (CI - Analyst Report). All these companies carry a Zacks Rank #1 (Strong Buy).

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