The board of directors of The Hanover Insurance Group, Inc. THG approved a 5.9% hike in its quarterly dividend, marking the 20th straight year of increase. The payout now stands at 90 cents per share compared with the earlier payout of 85 cents per share. 

The company’s five-year annualized dividend growth of about 6.8% and the payout ratio of 30 not only reflect this Zacks Rank #3 (Hold) insurer’s operational strength but also its commitment to distributing wealth to shareholders. This insurer also pays special dividend. With a dividend yield 2.2%, which is better than the industry average of 0.5%, THG is a prudent pick for yield-seeking investors.  

With 36.5 million shares outstanding as of Sept 30, 2024, THG will have to pay nearly $32.9 million as a quarterly dividend. Shareholders of record on Dec. 13, 2024 will receive the meatier dividend on Dec. 27, 2024. 

A diversified book of business, lowered coastal exposure and enhanced pricing for catastrophes, prudent pricing segmentation, growth in target states, product lines and industry classes in the middle market should help to deliver solid results. This, in turn, will help it maintain the dividend streak. THG remains focused on prudently deploying capital in profitable business initiatives and returning the excess capital to shareholders. 

Shares of Hanover Insurance have gained 33.8% year to date compared with the industry’s rise of 11.2%. Operational excellence and a solid capital position should help shares trend higher. 
 

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

Assurant’s board of directors recently approved an 11% hike in cash dividend to 80 cents, up from 72 cents paid earlier. The recent hike marks the insurer increasing dividends for straight 20 quarters and currently yielding 1.5%. 

This move to distribute wealth to its shareholders bears testimony to AIZ’s solid capital position and uninterrupted cash generation capabilities, which are based on the strength of the Global Lifestyle and Global Housing business segments. The insurer uses the cash inflows primarily to make dividend payments to stockholders, repurchase shares and fund investments and acquisitions. 

Fidelity National’s board of directors approved a 9.1% hike in cash dividend to 50 cents. The company enjoys a scale advantage, given its market-leading position in residential purchase, refinance and commercial markets. It is investing in technology to widen its market-leading position.

Solid retail annuity sales and F&G's presence in institutional markets benefit assets under management. F&G invests in a high-quality and well-diversified portfolio and its average assets under management growth drives earnings. These positives should help the title insurer retain the dividend hike streak.

American Financial declared a special cash dividend of $4.00 per share in the third quarter. The aggregate amount of this special dividend will be approximately $335 million. 

American Financial Group’s 2.3% dividend yield is better than the industry average of 0.2%, making the stock an attractive pick for yield-seeking investors. AFG’s robust operating profitability at the property and casualty segment and effective capital management support shareholder returns.

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

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