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Why Hanover Insurance Group (THG) is a Top Dividend Stock for Your Portfolio
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Getting big returns from financial portfolios, whether through stocks, bonds, ETFs, other securities, or a combination of all, is an investor's dream. But for income investors, generating consistent cash flow from each of your liquid investments is your primary focus.
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
Headquartered in Worcester, Hanover Insurance Group (THG - Free Report) is a Finance stock that has seen a price change of 9.67% so far this year. The insurance company is paying out a dividend of $0.81 per share at the moment, with a dividend yield of 2.19% compared to the Insurance - Property and Casualty industry's yield of 0.72% and the S&P 500's yield of 1.57%.
In terms of dividend growth, the company's current annualized dividend of $3.24 is up 5.9% from last year. In the past five-year period, Hanover Insurance Group has increased its dividend 5 times on a year-over-year basis for an average annual increase of 8.34%. Future dividend growth will depend on earnings growth as well as 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 59%, which means it paid out 59% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for THG for this fiscal year. The Zacks Consensus Estimate for 2023 is $9.72 per share, which represents a year-over-year growth rate of 75.77%.
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.
Big, established firms that have more secure profits are often seen as the best dividend options, but it's fairly uncommon to see high-growth businesses or tech start-ups offer their stockholders a dividend. During periods of rising interest rates, income investors must be mindful that high-yielding stocks tend to struggle. 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 Top Dividend Stock for Your Portfolio
Getting big returns from financial portfolios, whether through stocks, bonds, ETFs, other securities, or a combination of all, is an investor's dream. But for income investors, generating consistent cash flow from each of your liquid investments is your primary focus.
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
Headquartered in Worcester, Hanover Insurance Group (THG - Free Report) is a Finance stock that has seen a price change of 9.67% so far this year. The insurance company is paying out a dividend of $0.81 per share at the moment, with a dividend yield of 2.19% compared to the Insurance - Property and Casualty industry's yield of 0.72% and the S&P 500's yield of 1.57%.
In terms of dividend growth, the company's current annualized dividend of $3.24 is up 5.9% from last year. In the past five-year period, Hanover Insurance Group has increased its dividend 5 times on a year-over-year basis for an average annual increase of 8.34%. Future dividend growth will depend on earnings growth as well as 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 59%, which means it paid out 59% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for THG for this fiscal year. The Zacks Consensus Estimate for 2023 is $9.72 per share, which represents a year-over-year growth rate of 75.77%.
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.
Big, established firms that have more secure profits are often seen as the best dividend options, but it's fairly uncommon to see high-growth businesses or tech start-ups offer their stockholders a dividend. During periods of rising interest rates, income investors must be mindful that high-yielding stocks tend to struggle. 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).