Yahoo Finance Radian (RDN) Boosts Shareholder Value, Hikes Dividend by 12.5%
The board of directors of Radian Group Inc. RDN approved a 12.5% hike in its annual dividend in its continued effort to boost shareholders value. With this, the payout now stands at 22.5 cents per share, compared with the earlier payout of 20 cents per share. This is the 4th consecutive year where RDN has increased the quarterly dividend with a total increase of 80% over the past three years.
Shareholders of record as of Feb 27, 2023 will receive the meatier dividend on Mar 15, 2023. The company’s track record of disbursing capital appears impressive to investors. Shares of Radian gained 0.08% on the last trading day.
Based on the closing share price of $22.28 on Feb 15, the raised payout represents a dividend yield of 3.5%, better than its industry’s average of nearly 2.2%. Prior to this, the company had raised quarterly dividend by 43% last February.
Notably, Radian’s dividend has witnessed an eight-year CAGR (2016-2023) of 75.5%.
The multi-line insurer maintains a solid balance sheet with sufficient liquidity and strong cash flows. A strong capital position helps Radian Group deploy capital via share repurchases and dividend hikes that enhance shareholders value. Radian’s solid cash flow also looks impressive.
As of Dec 31, 2022, Radian maintained nearly $902.8 million of available liquidity. Total Holding company liquidity was $1.2 billion as of Dec 31, 2022, which includes $275 million unsecured revolving credit facility. Excess available resources to support PMIERs of $5.6 billion were 45% higher than Radian Guaranty's minimum required assets.
In January 2023, the board of directors approved a new share repurchase program that provides flexibility to Radian Group to buy back shares opportunistically and spend up to $300 million. The authorization expires on Jan 31, 2025.
The Pennsylvania Insurance Department also approved a $282 million return of capital and a $100 million early repayment of an outstanding surplus note from Radian Guaranty to Radian Group, both of which were paid on Dec 30, 2022. As a result, RDN expects Radian Guaranty to begin paying recurring ordinary dividends to Radian Group with 2023 ordinary dividends are estimated to be in the range of $300 to $400 million.
Return on equity, a profitability measure of how efficiently a company utilizes its shareholders money, is 22.5% in the trailing 12 months, up 850 basis points year over year. In 2022, the adjusted net operating return on equity was 20.3%, expanded 630 basis points year over year.
Shares of this Zacks Rank #3 (Hold) company have lost 4.5% in the past year, compared with the industry’s decline of 1.2%. Improvement in the quality and size of mortgage insurance in force, declining claim payments and a solid capital position should help the shares bounce back.
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Given the solid capital level of the insurance industry and an improving operating backdrop favoring strong operational performance, another insurer like Cincinnati Financial Corporation CINF has resorted to effective capital deployment in January 2023 to enhance shareholders' value. The board of directors approved a dividend of 75 cents per share for the first quarter of 2023, reflecting a 9% increase. The dividend will be paid out on Apr 14 to shareholders of record as of Mar 17.
This action sets the stage for a 63rd consecutive year of rising dividend payments. This reflects Cincinnati Financial’s strong operating performance, the board's positive outlook and confidence in outstanding capital, liquidity and financial flexibility. Shares of CINF has gained 0.2% in the past year
Stocks That Warrant a Look
Some better-ranked stocks from the same space are Old Republic International Corporation ORI and Allianz SE ALIZY. While Old Republic International sports a Zacks Rank #1 (Strong Buy), Allianz carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Old Republic International beat estimates in three of the last four quarters and missed in one, the average being 21.89%. The Zacks Consensus Estimate for 2023 and 2024 has moved 7.3% and 6.8% north in the past 30 days.
The Zacks Consensus Estimate for ORI’s 2024 earnings per share is pegged at $2.35, indicating year-over-year increase of 6.8%. In the past year, ORI has gained 0.2%.
The Zacks Consensus Estimate for ALIZY’s 2023 earnings per share is pegged at $2.54, indicating year-over-year increase of 48.1%. In the past year, ALIZY has lost 3%.
The Zacks Consensus Estimate for 2023 has moved 2.4% north in the past 30 days.
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Cincinnati Financial Corporation (CINF) : Free Stock Analysis Report
Radian Group Inc. (RDN) : Free Stock Analysis Report
Old Republic International Corporation (ORI) : Free Stock Analysis Report
Allianz SE (ALIZY) : Free Stock Analysis Report