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W.R. Berkley OK’s 7.7% Dividend Hike, Special Dividend


In a bid to return more value to shareholders, the board of directors of W.R. Berkley Corporation WRB recently approved a 7.7% hike in its quarterly dividend. The company will now reward investors with a dividend of 14 cents per share as against 13 cents paid on Apr 5, 2017.

Shareholders on record as of Jun 15, will have the meatier dividend in their pockets on Jul 5, 2017. The recent increase takes the annual dividend to 56 cents per share. Based on the closing share price of $66.45 as of May 16, the increased payout translates to a dividend yield of 0.78%.

Backed by its operating strength, the property and casualty (P&C) insurer has a solid track record of increasing dividend each year. The company has grown its dividend at a five-year CAGR of 11.84%. Interestingly, the latest dividend hike is the 13th consecutive increase since 2005.

This apart, the board of directors of the P&C insurer announced a special dividend of 50 cents per share. The special dividend will be paid on Jul 5, to the shareholders on record as of Jun 15, 2017. The company has a record of paying special dividend five times since 2011.

W.R. Berkley has a solid balance sheet with sufficient liquidity and robust cash flows. The company’s initiatives are supported by its solid cash position, which in turn, is driven by consistently strong operational performance. The P&C insurer has been enhancing its investors’ value through prudent capital deployment in the form of share buybacks and dividend hikes. Such initiatives not only testify to the operational and financial strength of a company, but also make a stock attractive for yield-seeking investors.

Share Price Movement

Shares of W.R. Berkley lost 3.51% since the release of first-quarter 2017 results, underperforming the Zacks categorized Property and Casualty Insurance industry’s decline of 1.08%. However, we expect solid top-line growth, higher net investment income and a robust capital position aiding shareholder friendly moves to help the stock to turn around in the near term.

Zacks Rank

However, this Zacks Rank #5 (Strong Sell) stock has witnessed its estimates moving south over the last few weeks. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. We expect this shareholder-friendly move to induce analysts to raise estimates, leading to a rank upgrade.

Stocks to Consider

Some better-ranked stocks from the same space include CNA Financial Corp. CNA, Fidelity National Financial, Inc. FNF and ProAssurance Corp. PRA. Each of these stocks holds a Zacks Rank #2 (Buy).

CNA Financial offers commercial P&C insurance products primarily in the United States. The company delivered positive surprises in three of the last four quarters with an average beat of 12.45%.

Fidelity National provides title insurance, and technology and transaction services to the real estate and mortgage industries in the United States. The company delivered positive surprises in three of the last four quarters with an average beat of 8.47%.

ProAssurance Corporation offers P&C insurance, and reinsurance products in the United States. The company delivered positive surprises in all of the last four quarters with an average beat of 16.59%.

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