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This is Why Hanover Insurance Group (THG) is a Great Dividend Stock
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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 for income investors, generating consistent cash flow from each of your liquid investments is your primary focus.
Cash flow can come from bond interest, interest from other types of investments, and of course, dividends. A dividend is that coveted distribution of a company's earnings paid out to shareholders, and investors often view it by its dividend yield, a metric that measures the dividend as a percent of the current stock price. Many academic studies show that dividends make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.
Hanover Insurance Group in Focus
Based in Worcester, Hanover Insurance Group (THG - Free Report) is in the Finance sector, and so far this year, shares have seen a price change of 19.83%. The insurance company is currently shelling out a dividend of $0.7 per share, with a dividend yield of 2%. This compares to the Insurance - Property and Casualty industry's yield of 0.98% and the S&P 500's yield of 1.36%.
In terms of dividend growth, the company's current annualized dividend of $2.80 is up 5.7% 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 9.06%. Looking ahead, future dividend growth will be dependent on earnings growth and payout ratio, which is the proportion of a company's annual earnings per share that it pays out as a dividend. Hanover Insurance's current payout ratio is 28%. This means it paid out 28% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for THG for this fiscal year. The Zacks Consensus Estimate for 2021 is $9.58 per share, with earnings expected to increase 2.79% from the year ago period.
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.
High-growth firms or tech start-ups, for example, rarely provide their shareholders a dividend, while larger, more established companies that have more secure profits are often seen as the best dividend options. Income investors must be conscious of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. That said, they can take comfort from the fact that THG is not only an attractive dividend play, but also represents a compelling investment opportunity with a Zacks Rank of #2 (Buy).
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This is Why Hanover Insurance Group (THG) is a Great Dividend Stock
All investors love getting big returns from their portfolio, whether it's through stocks, bonds, ETFs, or other types of securities. But for income investors, generating consistent cash flow from each of your liquid investments is your primary focus.
Cash flow can come from bond interest, interest from other types of investments, and of course, dividends. A dividend is that coveted distribution of a company's earnings paid out to shareholders, and investors often view it by its dividend yield, a metric that measures the dividend as a percent of the current stock price. Many academic studies show that dividends make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.
Hanover Insurance Group in Focus
Based in Worcester, Hanover Insurance Group (THG - Free Report) is in the Finance sector, and so far this year, shares have seen a price change of 19.83%. The insurance company is currently shelling out a dividend of $0.7 per share, with a dividend yield of 2%. This compares to the Insurance - Property and Casualty industry's yield of 0.98% and the S&P 500's yield of 1.36%.
In terms of dividend growth, the company's current annualized dividend of $2.80 is up 5.7% 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 9.06%. Looking ahead, future dividend growth will be dependent on earnings growth and payout ratio, which is the proportion of a company's annual earnings per share that it pays out as a dividend. Hanover Insurance's current payout ratio is 28%. This means it paid out 28% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for THG for this fiscal year. The Zacks Consensus Estimate for 2021 is $9.58 per share, with earnings expected to increase 2.79% from the year ago period.
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.
High-growth firms or tech start-ups, for example, rarely provide their shareholders a dividend, while larger, more established companies that have more secure profits are often seen as the best dividend options. Income investors must be conscious of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. That said, they can take comfort from the fact that THG is not only an attractive dividend play, but also represents a compelling investment opportunity with a Zacks Rank of #2 (Buy).