In a bid to enhance shareholder value, the board of directors of Radian Group Inc. (RDN - Free Report) recently announced that it has increased its dividend of 0.25 cents by 4900% to 12.5 cents. Shareholders of record on Feb 24, 2020 would receive this meatier dividend on Mar 6, 2020. The company’s track record of disbursing capital appears impressive to investors.
The dividend raise is supported by the company’s strong capital structure. Its healthy balance sheet with unparalleled financial flexibility allows investment in business.
Moreover, its board members declared an increase in the current share buyback plan from $200 million to $475 million, extending the program to August 2021.
Radian Group took a few initiatives that will consolidate its capital structure by extending debt maturities while enhancing financial flexibility. In April 2019, Pennsylvania Insurance Department approved a $375-million return on capital from Radian Guaranty to Radian Group for improving its financial flexibility and capital position.
Radian Group’s strong capital position buoys investors’ confidence in the company to benefit it going forward. Maintenance of capital resources at sufficient levels will provide flexibility to cushion future business growth. The company’s cash flow also looks impressive.
Radian is firmly focused on improving its mortgage insurance portfolio to drive long-term earnings growth. It is poised for growth on lower delinquency and decline in levels of paid claims and better risk-based capital ratio. With its business restructuring, the company intensified its focus on core business and services with higher-growth potential besides more predictable and recurring fee-based revenue stream. All these along with a steady financial position would likely help the company continue disbursing its capital going forward. In 2019, its dividend payout ratio was 0.33%, which might increase in the near term.
Shares of this Zacks Rank #2 (Buy) company have gained almost 16% in the past year, outperforming the industry’s growth of 8.9%.
Other Stocks to Consider
Investors interested in the insurance industry might take a look at some other top-ranked stocks like Kemper Corporation (KMPR - Free Report) , MGIC Investment Corporation (MTG - Free Report) and RLI Corp. (RLI - Free Report) . You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Kemper Corporation provides property and casualty, and life and health insurance in the United States. The company has a Zacks Rank of 2 and it managed to pull off average four-quarter positive surprise of 12.4%.
MGIC Investment provides private mortgage insurance, other mortgage credit risk management solutions and ancillary services to lenders and government sponsored entities. It is Zacks #2 Ranked and managed to deliver average four-quarter positive surprise of 13.4%.
RLI Corp. underwrites property and casualty insurance in the United States and around the globe. The company came up with average four-quarter beat of 20.4% and flaunts a Zacks Rank #1.
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