Fidelity National Financial Boosts Quarterly Dividend 11% (FNF)
By: Ned Piplovic,
Fidelity National Financial, Inc. (NYSE:FNF) followed six consecutive years of double-digit-percentage annual dividend hikes with another 11% boost to its quarterly dividend, which currently yields 3%.
In addition to the double-digit-percentage dividend boost, the company’s share price experienced a 40%-plus growth over the past year and combined with the total annual dividend income in 2017 for a total return of almost 50% over the past 12 months.
The company will distribute its next quarterly dividend payout on the March 30, 2018, pay date to all its shareholders of record prior to the March 15, 2018, ex-dividend date.
Fidelity National Financial, Inc. (NYSE:FNF)
Headquartered in Jacksonville, Florida, and founded in 1847, Fidelity National Financial, Inc. provides title insurance, technology and transaction services to the real estate and mortgage industries in the United States. Through its title insurance underwriters — Fidelity National Title, Chicago Title, Commonwealth Land Title and Alamo Title — the company’s Title Group issues more title insurance policies than any other title company in the United States. In addition to title insurance, the company offers escrow and other title-related services, including collection and trust activities, trustee sales guarantees, recordings and conveyances and home warranty insurance. The company also offers other title-related services used in the production and management of mortgage loans, as well as engages in the real estate brokerage business.
The company enhanced its quarterly dividend amount 11.1% from last period’s $0.27 payout to the current $0.30 distribution. This new distribution amount converts to a $1.20 annualized payout and a 3% forward dividend yield. The current yield is about 7% below company’s own 3.2% average yield for the trailing five years. While the dividend payout continued to rise, it grew slower than the 40%-plus asset appreciation. Using the share price from 12 months ago for the yield calculation would produce a 4.3% yield.
However, even the current 3% yield is still the second-highest yield in the Surety & Title Insurance market segment and 36% higher than the 2.18% average yield of the entire segment. The company has been paying dividends since 1993 and has enhanced its annual dividend amount for the past seven consecutive years. During that period, the total annual dividend amount advanced at an average growth rate of 14% per year and rose 150% since 2011. The company’s current Payout Dividend Ratio of 61% is a little above the sustainable level but does not suggest that the company will be unable to continue supporting future dividend hikes.
The share price reached its 52-week low of $26.82 on March 14, 2017, after a 3.1% pullback in the first two weeks of the trailing 12 months (TTM). However, after the mid-March bottom, the share price took off and rose 30% by the end of July, where the share price experienced some resistance at the $35 level and traded flat until mid-October. After breaking through the resistance on October 18, 2017, the share price ascended another 20% for a total gain of 56% before reaching its 52-week high of $41.85 on January 17, 2018.
The share price lost 12% in the first week of February during the market selloff but recovered 70% of those losses and closed on March 2, 2018, at $38.26. This closing price is 8.6% short of the January peak, 38.2% higher than it was one year earlier, 43% higher than the 52-week-low from mid-March 2017 and 158% higher than it was five years ago.
The rising dividend income and the significant asset appreciation rewarded FNF’s shareholders with substantial total returns over the past several years. For the trailing 12 months, the total return was nearly 50%, with total returns for the past three and five years coming in at 62% and 200%, respectively.
The 50-day moving average (MA) has been above the 200-day MA since the beginning of March 2017 and continues its uptrend. During its most recent drop in early February 2018, the share price dipped below the 50-day MA but was back above the average as of February 23, 2018. While the share price might experience some volatility and minor corrections periodically, the technical indicators suggest that the share price might have more room to grow, at least over the next few quarters.
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