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Why Hanover Insurance Group (THG) is a Top Dividend Stock for Your Portfolio
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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. However, 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 the distribution of a company's earnings paid out to shareholders; it's often viewed by its dividend yield, a metric that measures a 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 7.93% since the start of the year. The insurance company is currently shelling out a dividend of $0.9 per share, with a dividend yield of 2.16%. This compares to the Insurance - Property and Casualty industry's yield of 0.55% and the S&P 500's yield of 1.59%.
In terms of dividend growth, the company's current annualized dividend of $3.60 is up 4.3% 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 6.93%. 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. Hanover Insurance's current payout ratio is 25%, meaning it paid out 25% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for THG for this fiscal year. The Zacks Consensus Estimate for 2025 is $14.49 per share, with earnings expected to increase 8.62% from the year ago period.
Bottom Line
Investors like dividends for a variety of different reasons, from tax advantages and decreasing overall portfolio risk to considerably improving stock investing profits. It's important to keep in mind that not all companies provide 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. Income investors must be conscious of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. With that in mind, THG is a compelling investment opportunity. Not only is it a strong dividend play, but the stock currently sits at a Zacks Rank of 3 (Hold).
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Why Hanover Insurance Group (THG) is a Top Dividend Stock for Your Portfolio
All investors love getting big returns from their portfolio, whether it's through stocks, bonds, ETFs, or other types of securities. However, 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 the distribution of a company's earnings paid out to shareholders; it's often viewed by its dividend yield, a metric that measures a 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 7.93% since the start of the year. The insurance company is currently shelling out a dividend of $0.9 per share, with a dividend yield of 2.16%. This compares to the Insurance - Property and Casualty industry's yield of 0.55% and the S&P 500's yield of 1.59%.
In terms of dividend growth, the company's current annualized dividend of $3.60 is up 4.3% 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 6.93%. 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. Hanover Insurance's current payout ratio is 25%, meaning it paid out 25% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for THG for this fiscal year. The Zacks Consensus Estimate for 2025 is $14.49 per share, with earnings expected to increase 8.62% from the year ago period.
Bottom Line
Investors like dividends for a variety of different reasons, from tax advantages and decreasing overall portfolio risk to considerably improving stock investing profits. It's important to keep in mind that not all companies provide 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. Income investors must be conscious of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. With that in mind, THG is a compelling investment opportunity. Not only is it a strong dividend play, but the stock currently sits at a Zacks Rank of 3 (Hold).