The board of directors of W.R. Berkley Corporation WRB recently approved a special cash dividend of 50 cents per share to be paid on Dec 14 to shareholders of record as of Nov 30, 2017.
The latest authorization marks the second special dividend approved this year. The previous payout of 50 cents was made in July. With this, the company will be offering its sixth special dividend since 2012.
Including nearly about $28.4 million spent on buybacks and $194.7 million of special and regular dividends announced, W. R. Berkley has returned about $2263.1 million to its shareholders till date in 2017.
Engaging in shareholder-friendly moves is well-supported by W.R. Berkley’s strong capital position. The property and casualty insurer maintains a solid balance sheet with sufficient liquidity and strong cash flows.
Apart from paying special dividends, the property and casualty insurer is known for hiking the same each year with the amount having witnessed a five-year CAGR (2012-2017) of 9.2%. The company’s payout ratio of 34.1 betters the industry average of 25.1.
Concurrently, the board of directors announced a regular quarterly cash dividend of 14 cents per share.
W.R. Berkley carries a Zacks Rank #4 (Sell). Shares of the company have gained 2.4% year to date, underperforming the industry’s increase of 11.7%. The stock has seen the Zacks Consensus estimate for 2017 being moved 4.1% south while for 2018, the same being revised 2.4% downward over the last 30 days. However, we believe that the company’s initiative to share more profits with shareholders while recovering from the catastrophe loss caused in the third quarter, testifies its inherent strength. This might also aid the stock to turn around and motivate analysts to push their estimates upward.
Rewarding shareholders with more profits via dividends and share buybacks seems to be a well-accepted strategy adopted by insurers to raise investors’ confidence in their stock. Recently, the board of directors of RLI Corp. RLI approved a special dividend of $2 per share. Also, Assurant Inc.’s AIZ board approved a 6% increase in dividend while Sun Life Financial Inc. SLF hiked the same by 5%.
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