The board of directors of W.R. Berkley Corporation (WRB - Free Report) recently approved a 7.1% increase in dividends as well as a special cash dividend of 50 cents per share, banking on a solid capital position.
The company will now pay a dividend of 60 cents per share annually or 15 cents quarterly, yielding 0.8% based on the closing price of $76.47 as of May 31, 2018. Shareholders of record on Jun 15 should be awarded with the meatier dividend on Jul 5, 2018.
The company boasts an impressive track of dividend hikes at regular intervals and the recent raise marks its 13th increase since 2005. The company’s dividend has grown 50% over the last five years. Its payout ratio of 33.2 betters the industry average of about 18.
With respect to special dividend, the recent one marks the seventh approval since 2012. Shareholders of record on Jun 11 should be rewarded with the meatier dividend on Jun 18, 2018.
W.R. Berkley’s engagement in shareholder-friendly moves is well-supported by its firm capital position, driven by operational efficiency. This property and casualty insurer maintains a solid balance sheet with sufficient liquidity and strong cash flows.
We expect such effective capital deployment to sustain in the long run as the company continues to benefit from a growing contribution by new startup units, well-poised international business, rate increases and a reserving discipline driving solid cash flow generation. The overhaul of tax rate should also lend additional support.
W.R. Berkley carries a Zacks Rank #3 (Hold). Year to date, shares of the company have gained 6.9%, outperforming the industry’s decrease of 1.4%. Its operational excellence aiding effective capital deployment should help continue the stock's bull run.
Dividend hikes and share repurchases seem a well-accepted strategy to solidify investor confidence in the stock. In fact, post the tax rate revamp, tax incidence of the companies has been lowered, driving earnings and widening scope for more capital deployment. Evidently, the board of directors of Chubb Limited (CB - Free Report) recently announced a 3% hike in its quarterly dividend. Also, CNO Financial Group, Inc. (CNO - Free Report) raised the quarterly dividend by 11% while Unum Group (UNM - Free Report) increased the same by 13%.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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