Everest Re Group Boost Quarterly Dividend 7.7% (RE)
By: Ned Piplovic,
Everest Re Group, Ltd. (NYSE:RE) – an international insurance and reinsurance firm – rewarded its shareholders with a quarterly dividend boost of 7.7% for the last quarterly distribution in 2018.
The upcoming quarterly dividend boost is the company’s sixth consecutive annual hike since 2012. Prior to the current streak, the company paid a flat $1.92 annual payout for the previous six years. Over the past two decades, the company has hiked its annual dividend distributions 14 times, or 70% of the time and managed to avoid any dividend cuts.
While the company’s share price is slightly down for the past 12 months, Everest has delivered to its shareholders strong long-term performance. The company’s combined book value per share and accumulated dividends advanced at an average growth rate of 12% per year over the past two decades.
Despite the recent share price pullback, Everest’s solid fundamentals should intrigue some investors to do their own research to determine whether the current price weakening could be a buying opportunity. The company reduced its debt leverage from nearly 20% to approximately 7% over the past decade. Additionally, the current dividend payout ratio of just 20% is an excellent indicator that the company’s current earnings are more than enough to cover the dividend distributions, as well as support dividend hikes for the foreseeable future.
Investors convinced that the share price might bounce back, should do their research and act before the company’s next ex-dividend date on November 27, 2018, to ensure eligibility for the next round of dividend distributions on the December 12, 2018, pay date.
Everest Re Group, Ltd.(NYSE:RE)
Headquartered in Hamilton, Bermuda and founded in 1973, Everest Re Group, Ltd., provides reinsurance and insurance products through four business segments. The U.S. Reinsurance segment writes property and casualty reinsurance and specialty lines of insurance in the Unites States. The International segment provides the same services in Canada, Singapore, Brazil, Miami and New Jersey. Additionally, the Bermuda segment provides reinsurance and insurance services in Bermuda, as well as reinsurance to the United Kingdom and European markets. The Insurance segment writes property and casualty insurance products directly, as well as through general agents, brokers and surplus lines brokers in the United States and Canada. In addition to marine, aviation, surety, accident and health insurance, the company also offers errors and omissions liability, directors’ and officers’ liability, medical malpractice and worker’s compensation products. In 2017, more than 70% of the company’s business was reinsurance with insurance comprising the remaining 30%. Additionally, 42% of the company’s fixed income vehicles carry a AAA credit rating, with nearly 80% rated A or higher.
As already indicated, the share price experienced some volatility and ended the year lower than it started. After spiking 8.4% between the beginning of November 2017 and early March 2018, the share price fell nearly 22% towards its 52-week low of $205.03 on October 26, 2018. However, since bottoming out at the end of October, the share price recovered nearly 20% of these losses to close on November 19, 2018 at $215.81. This closing price was 3.6% lower than it was 12 months earlier, 5.3% above the 52-week low from October and 38% higher than it was five years ago.
While the share price struggled a little in 2018, the company continued to reward shareholders with steady quarterly dividend distributions. The current $1.40 quarterly dividend is 7.7% higher than the 1.3% payout from the same period last year. This new quarterly dividend converts to a $5.60 annualized payout amount, which currently yields 2.6%. This dividend yield is nearly 37% higher than the company’s own 1.9% average yield over the past five years.
While trailing the 3.3% average yield of the overall Financials sector by approximately 20%, Everest’s current yield is more than 50% above the 1.7% simple average of all the companies in the Property & Casualty Insurance industry segment. The company’s current yield is also in line with the 2.64% simple average yield of the segments only dividend -paying peers.
During the past six years, Evergreen nearly tripled its annual dividend amount, which corresponds to an average growth rate of 19.5% per year. Furthermore, with six years of no dividend hikes, the company managed to advance its total annual dividend payout amount 28-fold and maintain an average annual growth rate of more than 18% over the past 20 years.
While suffering a total loss of approximately 1% over the past 12 months, the shareholders enjoyed a 28% total return over the past three years and a 52% total return over the past five years.
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