Erie Indemnity (ERIE) OK's Dividend Hike to Share More Profits

The board of directors of Erie Indemnity Company ERIE approved a 7.2% hike in its dividend. Shareholders of record, as of Jan 5, 2023, will receive the meatier dividend on Jan 20, 2023.

With the approval, the new payout stands at $1.19 per Class A share compared with the earlier payout of $1.1 per share and $178.50 per Class B share compared with the earlier payout of $166.50 per share. Erie Indemnity has been paying dividends since 1933. Based on the stock’s Dec 7 closing price of $270.76, the new dividend on Class A shares will yield 1.6%, better than the industry average of 1.1%.

Erie Indemnity has increased dividends each year, reflecting operational excellence and the company’s commitment to return value to its shareholders. Its dividend witnessed a 10-year CAGR of nearly 7.2%.

A solid capital position and balance sheet strength continue to support effective capital deployment. Apart from hiking dividends, Erie Indemnity occasionally pays special dividends and buys back shares.

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 this Zacks Rank #3 (Hold) insurer sustain dividend hikes. Shares of Erie Indemnity have rallied 40.6% year to date, outperforming the industry’s increase of 0.1%.

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Given a solid capital level in the insurance industry and an improving operating backdrop favoring strong operational performance, insurers like The Hanover Insurance Group, Inc. THG, Assurant Inc. AIZ and American Financial Group AFG have resorted to effective capital deployment to enhance shareholders’ value.

The Hanover Insurance’s board approved an 8% hike in its quarterly dividend. Banking on operational excellence, The Hanover Insurance increased dividends each year. This reflects on its commitment to return value to shareholders. THG’s dividend witnessed a 10-year CAGR of 10.4%. Prudent management of the business mix, focus on growth of the most profitable product lines, stable retention, better pricing and a strong market presence should help The Hanover Insurance maintain the streak.

In November 2022, Assurant’s board approved a 2.9% hike in its quarterly dividend. The recent hike marked the 18th consecutive dividend increase by Assurant since its initial public offering in 2004. Effective capital deployment highlights AIZ’s commitment to prudent capital management, reflecting its sustained operational performance and sound financial prospects.

American Financial Group declared a special cash dividend of $2 per share, the aggregate of which will be nearly $170 million. American Financial Group’s 1.7% dividend yield betters the industry average of 0.4%, making the stock attractive for yield-seeking investors. AFG’s robust operating profitability in the property and casualty segment and effective capital management support shareholder returns.

Shares of The Hanover Insurance Group and American Financial have gained 7.5% and 0.3% while the same for Assurant lost 17.2% year to date.

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

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