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First American Raises Dividend by 11%, Boosts Shareholder Returns
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Key Takeaways
First American increased its quarterly dividend 11% to 61 cents per share.
The company had $239.4 million in cash and $900 million available on its revolving credit facility.
First American repurchased 0.9 million shares for $54 million in the first half of 2026.
First American Financial Corporation (FAF - Free Report) recently announced a substantial increase in its quarterly cash dividend, underscoring its commitment to rewarding shareholders. The move reflects confidence in First American’s business prospects and its continued commitment to returning capital to shareholders.
Approved by the board of directors, the quarterly cash dividend has now been increased to 61 cents per share of common stock from 55 cents. This increase represents a remarkable 11% rise over the previously declared rate. This move is a testament to the insurer’s strong financial position and long-term growth prospects.
Based on the stock’s Sept. 16 closing price of $71.11, the new dividend will yield 3.1%, which is better than the industry average of 0.2%. Also, the payout ratio of 30.99 compares favorably with the industry average of 10.43. This makes First American an attractive pick for yield-seeking investors. Shareholders of record on Sept. 28 will receive the increased dividend on Oct. 5.
Historically, FAF has a solid track record of dividend increases, with the metric witnessing a nine-year (2018-2026) CAGR of 5.4%.
Financial Strength and Capital Management
FAF remains committed to returning capital to shareholders through a combination of dividends and opportunistic share repurchases and expects to continue increasing dividends over time, reflecting confidence in the company's long-term earnings growth.
First American maintains a stock repurchase plan with authorization up to $300 million of the company’s common stock, of which $246 million remained as of June 30, 2026. During the six months ended June 30, 2026, the company repurchased and retired 0.9 million shares of its common stock for a total purchase price of $54 million.
The dividend hike and the increase in repurchase authorization reflect the insurer’s strong financial condition, liquidity, and long-standing commitment to returning capital to stockholders. First American enjoys a strong liquidity position to enhance operating leverage. Its strong liquidity not only mitigates balance sheet risks but also paves the way for accelerated capital deployment.
As of June 30, 2026, the holding company’s liquidity sources included $239.4 million of cash and cash equivalents and $900 million available on the company’s revolving credit facility. Management believes the holding company’s liquidity is sufficient to meet anticipated cash requirements and obligations for at least the next 12 months.
Return on equity, a profitability measure of how efficiently a company utilizes its shareholders' money, was 13.3% in the trailing 12 months, which compared favorably with the industry average of 7.5%.
Robust operational performance, solid investment performance and strong capital management are likely to help FAF in sustaining the dividend streak.
Zacks Rank and Price Performance
Shares of this Zacks Rank #3 (Hold) title insurer have gained 15.7% year to date, outperforming the industry’s growth of 4%. FAF’s policy of ramping up growth and capital position should help the stock retain momentum.
Image Source: Zacks Investment Research
Other Insurers on the Same Path
American Financial Group (AFG - Free Report) announced a substantial increase in its annual common stock dividend in August 2026. Approved by the board of directors, the regular annual dividend has now been increased to $3.88 per share of common stock from $3.52. This increase represents a remarkable 10.2% rise over the previously declared rate. Effective October 2026, the increased dividend will be paid quarterly at 97 cents per share of common stock. The latest hike marks the 21st consecutive year of dividend increases.
AFG's compelling and diversified mix of specialty insurance businesses, entrepreneurial culture, disciplined operating philosophy and an astute team of in-house investment professionals continue to position it to create value for shareholders through a variety of insurance market conditions.
Unum Group (UNM - Free Report) is reinforcing its commitment to shareholder returns with a new $1 billion share repurchase authorization. Approved by the board of directors on Aug. 26, 2026, the program will begin on Sept. 1, 2026, immediately following the expiration of the company's existing repurchase program on Aug. 31, 2026. Under the new authorization, Unum can repurchase up to $1 billion of its common stock from time to time, with the timing and amount determined by management based on market conditions and other considerations.
The buyback should be considered within UNM's broader capital-allocation framework. UNM continues to balance share repurchases, dividends, investments in its businesses, and capital requirements associated with its insurance operations.
Mercury General’s earnings surpassed estimates in each of the last four quarters, the average surprise being 70.21%. Shares of MCY have jumped 8.4% in the year-to-date period. The Zacks Consensus Estimate for MCY’s 2026 earnings implies year-over-year growth of 61.3%.
View the Zacks #1 Rank List
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First American Raises Dividend by 11%, Boosts Shareholder Returns
Key Takeaways
First American Financial Corporation (FAF - Free Report) recently announced a substantial increase in its quarterly cash dividend, underscoring its commitment to rewarding shareholders. The move reflects confidence in First American’s business prospects and its continued commitment to returning capital to shareholders.
Approved by the board of directors, the quarterly cash dividend has now been increased to 61 cents per share of common stock from 55 cents. This increase represents a remarkable 11% rise over the previously declared rate. This move is a testament to the insurer’s strong financial position and long-term growth prospects.
Based on the stock’s Sept. 16 closing price of $71.11, the new dividend will yield 3.1%, which is better than the industry average of 0.2%. Also, the payout ratio of 30.99 compares favorably with the industry average of 10.43. This makes First American an attractive pick for yield-seeking investors. Shareholders of record on Sept. 28 will receive the increased dividend on Oct. 5.
Historically, FAF has a solid track record of dividend increases, with the metric witnessing a nine-year (2018-2026) CAGR of 5.4%.
Financial Strength and Capital Management
FAF remains committed to returning capital to shareholders through a combination of dividends and opportunistic share repurchases and expects to continue increasing dividends over time, reflecting confidence in the company's long-term earnings growth.
First American maintains a stock repurchase plan with authorization up to $300 million of the company’s common stock, of which $246 million remained as of June 30, 2026. During the six months ended June 30, 2026, the company repurchased and retired 0.9 million shares of its common stock for a total purchase price of $54 million.
The dividend hike and the increase in repurchase authorization reflect the insurer’s strong financial condition, liquidity, and long-standing commitment to returning capital to stockholders. First American enjoys a strong liquidity position to enhance operating leverage. Its strong liquidity not only mitigates balance sheet risks but also paves the way for accelerated capital deployment.
As of June 30, 2026, the holding company’s liquidity sources included $239.4 million of cash and cash equivalents and $900 million available on the company’s revolving credit facility. Management believes the holding company’s liquidity is sufficient to meet anticipated cash requirements and obligations for at least the next 12 months.
Return on equity, a profitability measure of how efficiently a company utilizes its shareholders' money, was 13.3% in the trailing 12 months, which compared favorably with the industry average of 7.5%.
Robust operational performance, solid investment performance and strong capital management are likely to help FAF in sustaining the dividend streak.
Zacks Rank and Price Performance
Shares of this Zacks Rank #3 (Hold) title insurer have gained 15.7% year to date, outperforming the industry’s growth of 4%. FAF’s policy of ramping up growth and capital position should help the stock retain momentum.
Image Source: Zacks Investment Research
Other Insurers on the Same Path
American Financial Group (AFG - Free Report) announced a substantial increase in its annual common stock dividend in August 2026. Approved by the board of directors, the regular annual dividend has now been increased to $3.88 per share of common stock from $3.52. This increase represents a remarkable 10.2% rise over the previously declared rate. Effective October 2026, the increased dividend will be paid quarterly at 97 cents per share of common stock. The latest hike marks the 21st consecutive year of dividend increases.
AFG's compelling and diversified mix of specialty insurance businesses, entrepreneurial culture, disciplined operating philosophy and an astute team of in-house investment professionals continue to position it to create value for shareholders through a variety of insurance market conditions.
Unum Group (UNM - Free Report) is reinforcing its commitment to shareholder returns with a new $1 billion share repurchase authorization. Approved by the board of directors on Aug. 26, 2026, the program will begin on Sept. 1, 2026, immediately following the expiration of the company's existing repurchase program on Aug. 31, 2026. Under the new authorization, Unum can repurchase up to $1 billion of its common stock from time to time, with the timing and amount determined by management based on market conditions and other considerations.
The buyback should be considered within UNM's broader capital-allocation framework. UNM continues to balance share repurchases, dividends, investments in its businesses, and capital requirements associated with its insurance operations.
Another Stock to Consider
A better-ranked stock from the property and casualty insurance industry is Mercury General Corporation (MCY - Free Report) , which sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Mercury General’s earnings surpassed estimates in each of the last four quarters, the average surprise being 70.21%. Shares of MCY have jumped 8.4% in the year-to-date period. The Zacks Consensus Estimate for MCY’s 2026 earnings implies year-over-year growth of 61.3%.