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Cincinnati Financial's (CINF) Board Okays 10% Dividend Hike

Published 02/01/2022, 12:30 AM
Updated 07/09/2023, 06:31 AM

The board of directors of Cincinnati Financial Corporation (NASDAQ:CINF) CINF recently approved a 10% hike in its quarterly dividend to enhance shareholder value. The company will now pay out a dividend of 69 cents per share compared with 63 cents paid on Nov 19, 2021 . Shares of Cincinnati Financial gained 0.3% in the trading session on Jan 31.

Shareholders of record as of Mar 18, 2022, will receive the increased dividend on Apr 15, 2022.

Historically, the insurer boasts a consistent increase in dividends with the metric witnessing a eight-year CAGR (2015-2022) of 5.2%.

Based on the stock’s Jan 28 closing price of $117.43, the new dividend will yield 2.1%, better than the industry average of 0.3%. This makes Cincinnati Financial an attractive pick for yield-seeking investors.

The board of directors is committed to rewarding shareholders directly through cash dividends as well as special dividends and share repurchase authorizations. Consistent cash flow and sufficient cash balances continue to boost the liquidity of Cincinnati Financial. Moreover, investors should be impressed by its stellar record of 62 straight years of dividend increases, a record which is believed to be matched by only seven other publicly traded companies. Currently, it has 12 million shares remaining under the share repurchase authorization.

The 2022 dividend increase reflected its strong earnings performance and signaled management's and the board's positive outlook and confidence in its capital, liquidity and financial flexibility.

Shares of this Zacks Rank #3 (Hold) property and casualty insurer have gained 35.3% in the past year, outperforming the industry’s increase of 20.2%. Higher premiums, and continued strong performance at the Commercial Lines segment are likely to drive shares higher in the near term.

Zacks Investment ResearchImage Source: Zacks Investment Research

Given a solid capital level of the insurance industry, improving operating backdrop favoring strong operational performance, insurers like Arthur J. Gallagher & Co. AJG, AXIS Capital Holdings Limited AXS and Erie Indemnity Company ERIE have resorted to effective capital deployment to enhance shareholders value.

While Arthur J. Gallagher hiked its dividend by 6.3%, AXIS Capital Holdings’ board approved a 2.4% hike in its annual dividend. Erie Indemnity’s board approved a hike of 7.2%.

Arthur J. Gallagher has a dividend yield of 1.2%, better than the industry average of 1.1%. A strong capital and liquidity position enable Arthur J. Gallagher to enhance its shareholder value.

AXIS Capital’s 2.9% dividend yield betters the industry average of 0.3%, making the stock an attractive pick for yield-seeking investors. AXIS Capital’s robust balance sheet supports effective capital deployment. Axis Capital (NYSE:AXS) should be able to continually enhance shareholders value, riding on Specialty Insurance, Reinsurance plus Accident and Health, exit from underperforming lines and underwriting profitability.

Erie Indemnity’s dividend yield of 2.4% betters the industry average of 1.2%. Effective capital deployment is supported by its balance sheet strength. Improvement in premiums of homeowners and commercial multi-peril products, strengthening of business platforms as well as identification and development of new sources of revenues should help Erie Indemnity sustain dividend hikes.

In the past year, shares of Arthur J. Gallagher and AXIS Capital have gained 34.2% and 23.4%, respectively, whereas Erie Indemnity has lost 26.5%.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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Cincinnati Financial Corporation (CINF): Free Stock Analysis Report

Axis Capital Holdings Limited (AXS): Free Stock Analysis Report

Arthur J. Gallagher & Co. (AJG): Free Stock Analysis Report

Erie Indemnity Company (ERIE): Free Stock Analysis Report

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