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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 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 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 13.4% since the start of the year. The insurance company is paying out a dividend of $0.7 per share at the moment, with a dividend yield of 2.11% compared to the Insurance - Property and Casualty industry's yield of 1% and the S&P 500's yield of 1.41%.
In terms of dividend growth, the company's current annualized dividend of $2.80 is up 5.7% from last year. Over the last 5 years, Hanover Insurance Group has increased its dividend 5 times on a year-over-year basis 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. Right now, Hanover Insurance's payout ratio is 28%, which 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 $9.53 per share, with earnings expected to increase 2.25% 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.
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. 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 is also a compelling investment opportunity with a Zacks Rank of #2 (Buy).
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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 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 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 13.4% since the start of the year. The insurance company is paying out a dividend of $0.7 per share at the moment, with a dividend yield of 2.11% compared to the Insurance - Property and Casualty industry's yield of 1% and the S&P 500's yield of 1.41%.
In terms of dividend growth, the company's current annualized dividend of $2.80 is up 5.7% from last year. Over the last 5 years, Hanover Insurance Group has increased its dividend 5 times on a year-over-year basis 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. Right now, Hanover Insurance's payout ratio is 28%, which 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 $9.53 per share, with earnings expected to increase 2.25% 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.
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. 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 is also a compelling investment opportunity with a Zacks Rank of #2 (Buy).