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Hanover Insurance (THG) Ups Dividend to Share More Profit

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The board of directors of The Hanover Insurance Group, Inc. (THG - Free Report) approved a 5% hike in its quarterly dividend in its continued effort to boost shareholder value. Banking on operational excellence, Hanover Insurance has increased dividends for the 19th straight year, reflecting its commitment to return value to its shareholders. The payout now stands at 85 cents per share compared with the earlier payout of 81 cents per share.

Based on the Dec 5 closing price of $126.85, the new dividend will yield 2.7%, better than the industry average of 0.3%. With 35.8 million shares outstanding as of Sep 30, 2023, THG will have to pay $30.4 million as a quarterly dividend. Shareholders of record on Dec 15, 2021, will receive the meatier dividend on Dec 29, 2023.

Growth in the Core Commercial and Specialty segments, higher retention, improved pricing, loss control, risk prevention measures and a strong market presence should help the insurer maintain the streak. THG remains focused on prudently deploying capital in profitable business initiatives and returns the excess capital to shareholders. The insurer aims long-term return on equity target of 14% or higher by 2026.

Shares of Hanover Insurance have lost 6.2% year to date against the industry’s rise of 11.2%. Nonetheless, operational excellence and a solid capital position should help shares bounce back. THG currently carries a Zacks Rank #5 (Strong Sell).

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

Given a solid capital level in the insurance industry and an improving operating backdrop favoring strong operational performance, insurers like Assurant Inc. (AIZ - Free Report) , American Financial Group (AFG - Free Report) and RLI Corporation (RLI - Free Report) have resorted to effective capital deployment to enhance shareholders’ value.

In November 2023, Assurant’s board approved a 3% hike in its quarterly dividend. The recent hike marked the 19th consecutive dividend increase by Assurant since its initial public offering in 2004. Effective capital deployment highlights AIZ’s commitment toward prudent capital management, reflecting its sustained operational performance over a period of time and its sound financial prospects.

In November 2023, American Financial Group also declared a special cash dividend of $1.50 per share, the aggregate of which will be nearly $126 million. American Financial Group’s 2.6% dividend yield is better than the industry average of 0.3%, making the stock an attractive pick for yield-seeking investors. AFG’s robust operating profitability at the property and casualty segment and effective capital management support shareholder returns.

RLI’s board of directors approved a special cash dividend of $2.00 per share, marking the 14th straight special dividend. This insurer has also been paying dividends for 187 consecutive quarters and increased regular dividends in the last 48 straight years. Its dividends increased at a seven-year (2016-2023) CAGR of 3.9%. RLI’s dividend yield of 0.8% is better than the industry average of 0.3%. Over the last 10 years, the P&C insurer’s total cumulative dividends amounted to more than $1.37 billion, supported by sufficient liquidity and strong cash flow.

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