Back to top

Endurance Specialty Ups Div, Declares Buyback

Read MoreHide Full Article

In order to boost shareholders value, Bermuda-based property and casualty insurer, Endurance Specialty Holdings Ltd. increased its quarterly dividend by 6.25%. This translates into a quarterly cash dividend of 34 cents per share, up from 32 cents paid on Dec 31, 2013. The increased dividend will be paid on Mar 31, 2014, to shareholders of record as of Mar 17, 2014.

Based on the closing share price, the increased dividend implies a dividend yield of 2.62%. The current dividend yield is better than the industry yield of 2.12% and that of some other property and casualty insurers, American Financial Group Inc. (AFG - Free Report) with a yield of 1.57%, AmTrust Financial Services, Inc. (AFSI - Free Report) with a yield of 2.18% and White Mountains Insurance Group, Ltd. (WTM - Free Report) with a yield of 0.17%.

With this hike, the current annual dividend equates to $1.36 per share, up from $1.28 per share paid in 2013. The last dividend hike was announced in Feb 2013 where the company recorded a 3.2% increase in its quarterly dividend.

If we peek into the company’s history of dividend hikes, Endurance Specialty, after recording a whopping 19% hike in 2005, had maintained its quarterly dividend at 25 cents per share for 5 years. However, since then, the company has not deferred from increasing it dividends, which have risen at a four-year CAGR of 7.4%.

The capital deployment strategies of Endurance Specialty were also reflected by the company’s renewal of the share repurchase authorization. Concurrent to the dividend hike, the company announced a 5 million share repurchase authorization (through Feb 28, 2016) on expiration of the previous authorization of 7 million (expired in Nov 2013) that was authorized in Nov 2011. Endurance Specialty repurchased 0.3 million shares for $14.6 million in 2013.

The consistent dividend hikes and an enhancement of the share repurchase authorization represent the financial strength and long-term outlook of the company. Endurance Specialty has ample liquidity for the payment, cash and cash equivalents of $845.9 million at year-end 2013.

Endurance Specialty currently carries a Zacks Rank #3 (Hold). However, investors interested in the insurance industry may consider better-ranked stocks, American Financial Group, AmTrust Financial and White Mountains. These stocks carry a Zacks Rank #1 (Strong Buy).

More from Zacks Analyst Blog

You May Like