United Fire Group Boosts Quarterly Dividend 10.7% (UFCS)
By: Ned Piplovic,
After a brief interruption to its rising dividend streak following the 2008 financial crisis, United Fire Group, Inc. (NASDAQ:UFCS) has now boosted its annual dividend for the sixth consecutive year with the current 10.7% boost to its quarterly dividend.
Since introducing dividend distributions in 1987, the United Fire Group raised its annual dividend in 27 out of 31 years, or 87% of the time. The company failed to raise its annual dividend only during a four-year period between 2009 and 2012, when the company paid the same $0.60 total annual dividend each year that it paid in 2008. However, the company resumed raising its dividends in 2013 and continues that streak with the current hike.
In addition to the long history of rising dividend distributions, the company managed to offer its shareholders long-term asset appreciation as well. Just over the past five years, the company’s share price more than doubled and advanced more than 24% over the past 12 months.
The company will distribute its next quarterly dividend on company’s June 15, 2018, pay date to all its shareholders of record prior to the May 31, 2018, ex-dividend date.
United Fire Group, Inc. (NASDAQ:UFCS)
Headquartered in Cedar Rapids, Iowa, and founded in 1946 as the United Casualty Company, United Fire Group, Inc. provides individual and commercial insurance services in the United States. The company’s Property and Casualty Insurance segment offers commercial and personal lines of property and casualty insurance, as well as assumed reinsurance products. This segment’s commercial policies include fire and allied lines, other liability, automobile, workers’ compensation and surety coverage. Personal lines of insurance products include automobile, homeowners, fire and allied lines coverage. Additionally, the Life Insurance business segment underwrites deferred and immediate fixed annuities, as well as life insurance products, such as term life insurance.
As already indicated, the company boosted its current quarterly dividend payout 10.7%. The quarterly amount increased from the previous period’s $0.28 to the current $0.31 distribution payout. This new quarterly amount corresponds to a $1.24 annualized distribution for 2018 and a 2.3% forward dividend yield, which is just slightly below the company’s 2.4% average yield over the past five years.
The United Fire Group’s current yield trails the 3.13% average yield of the traditionally high-yield Financials sector by more than 25%. However, in a more relevant comparison with the 1.86% average dividend yield of its peers in the Property & Casualty Insurance industry, United Fire Group’s current yield comes out 24.7% higher.
Even with four years of flat annual dividend payouts, the company managed to maintain an average dividend growth rate of nearly 7% per year, which enhanced the company’s total annual payout amount nearly eight-fold since the dividend distributions started in 1987. Over the current streak of six consecutive annual dividend boosts, the company more than doubled its annual dividend payout. That level of growth over corresponds to an average compounded rate of nearly 13% per year.
This equity is not just a good source of a rising dividend income. The United Fire Group provides its shareholders with strong growth that has recovered from the recent overall market selloff more quickly than other stocks. The share price traded flat for the first 75 days of the trailing 12 months and then declined 8.7% over the subsequent 30 days to reach its 52-week low of $39.38 on September 8, 2017. After the 52-week low, the share price first gained more than 18% but gave back nearly all those gains and dropped back to just 3% above its September low by February 8, 2018.
The share price reversed trend after February 8, 2018, and gained 30% before peaking at $54.30 on May 21, 2018. Since its 52-week high, the share price pulled back 1.5% and closed on May 23, 2018, at $53.28. This closing price was 24% higher than it was one year earlier, nearly 36% above its 52-week low from September 2018 and double its own level from five years ago.
The company’s strong asset appreciation and rising dividend income combined to reward the company’s shareholders with 27%, 87% and 108% total returns over the past one, three and five years, respectively.
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Ned Piplovic is the assistant editor of website content at Eagle Financial Publications. He graduated from Columbia University with a Bachelor’s degree in Economics and Philosophy. Prior to joining Eagle, Ned spent 15 years in corporate operations and financial management. Ned writes for www.DividendInvestor.com and www.StockInvestor.com.