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W.R. Berkley (WRB) Boosts Shareholder Value With Dividend Hike

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The board of directors of W.R. Berkley Corporation (WRB - Free Report) recently approved a 8% hike in its quarterly dividend in a concerted effort to boost shareholders’ value. The company will now reward investors with a dividend of 13 cents per share.

The recent increase takes the annual dividend to 52 cents per share. Based on the closing share price of $76.05 as of Jun 15, the increased payout translates to a dividend yield of 0.6%.

Backed by its operating strength, the property and casualty insurer has a solid track record of increasing dividend each year. The latest dividend hike is the 16th consecutive increase since 2005. Shareholders of record on Jun 25 will receive the increased dividend on Jul 6.

Also, return on equity (ROE), a profitability measure of how efficiently a company utilizes its shareholders money, is 14.5% against the prior-year quarter’s negative ROE of 0.3% in the first quarter.

Apart from regular dividend raises, W.R. Berkley also pays special dividend and engages in share buybacks. Along with the dividend hike, a special cash dividend of 50 cents per share has been declared, which marked the 12th straight year of special dividend paid by the property and casualty insurer. Shareholders of record as of Jun 25 will receive the special dividend on Jul 6. During 2020, the company repurchased shares for $346 million and another $30 million in the first quarter of 2021.

W.R. Berkley has a solid balance sheet with sufficient liquidity and robust cash flows that support growth initiatives and effective capital deployment. The company had more than $2 billion in cash and cash equivalents at the end of first-quarter 2021. Moreover, cash flow from operations surged 103.8% year over year in the first quarter.

Being one of the largest commercial lines writers in the United States, it has been enhancing investors’ value through prudent capital deployment in the form of share buybacks and dividend hikes. Such initiatives not only reflect the operational and financial strength of the company but also make the stock attractive to yield-seeking investors.

Shares of W.R. Berkley have gained 30.4% in the past year compared with the industry’s increase of 36.2%. Steady net premium growth, improving combined ratio owing to additional rate and effective management of volatility and expenses and focus on underwriting profitability as well as on areas of the business that offer better margins should help the stock grow further. The stock carries a Zacks Rank #2 (Buy).

Zacks Investment ResearchImage Source: Zacks Investment Research

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Backed by their sturdy capital position and operational strength, three other insurers hiked their dividend rates. Recently, Radian Group Inc. (RDN - Free Report) , Chubb Limited (CB - Free Report) , and RLI Corp. (RLI - Free Report) hiked their respective dividend by 12%, 2.6% and 4.1%.

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