United Fire Group Rewards Shareholders With Dividend Hike

The board of directors of United Fire Group Inc. (NASDAQ:UFCS) recently approved a 13.6% hike in its quarterly dividend to share more profit with investors. The company will now pay a dividend of 25 cents as against 22 cents paid on Mar 15, 2016. Shareholders on record as of Jun 1 will have the meatier dividend in their pockets on Jun 15.

Based on yesterday’s closing share price of $41.36, the increased dividend translates to a yield of 2.4%. The company’s average dividend yield for the past five years is 2.5%, which is higher than the industry yield of 1.9%. The insurer has increased its dividend by 7.5% in the last five years.

United Fire Group has been regularly paying quarterly dividends since Mar 1968. Notably, this is the fourth quarterly dividend hike by the company since 2011. The last dividend increase was in the second quarter of 2015 when the company raised dividend payout by 9% 22 cents.

With about 26 million shares outstanding at the end of the first quarter, the company has to pay about $6.5 million quarterly or $26 million annually as dividend. A robust capital position supports its payout.

United Fire Group has always been committed to enhance its shareholders value via dividend hikes and share buybacks. Apart from dividends, the company has the authorization to repurchase up to 1.5 million of common stock under its share repurchase program till Aug 2016.

The company’s strong balance sheet supports its initiatives of increasing shareholder returns. The insurer’s competitive dividend and commitment to long-term shareholder value makes it an attractive pick for investors.

Some other insurance companies too recently raised their dividend payouts. Of late, Chubb Limited (NYSE:CB) approved a 3% hike in its quarterly cash dividend, while Marsh & McLennan Companies, Inc. (NYSE:MMC) increased its quarterly dividend by 9.7%. The Travelers Companies, Inc. (NYSE:TRV) also raised its payout by 10% on Apr 21. 2016.