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Brown & Brown (BRO) Rewards Shareholders With Dividend Hike

Zacks.com logo Zacks.com 10/21/2020

Brown & Brown, Inc.’s BRO board of directors recently approved a 8.8% hike in its quarterly dividend in a bid to enhance shareholder value. With this, the payout now stands at 9.25 cents per share compared with the earlier payout of 8.5 cents per share.

The dividend, which marked the 27th straight year of dividend hike, will be paid on Nov 18, 2020 to shareholders of record as on Nov 4.

Prior to this, the company had raised quarterly dividend by 6.25% in October 2019. The company has grown its dividend at a five year CAGR of 9.7%.

Based on the stock’s Oct 20 closing price of $46.41, the new dividend will yield 0.7% to the company.

Besides regular dividend hike, Brown & Brown, a leading insurance brokerage firm, also buys back shares. Notably, the company bought back shares worth around $537.7 million from the beginning of 2014 till June 30 of this year.

Brown & Brown enjoys strong liquidity position, which not only mitigates balance sheet risks but also paves the way for an accelerated capital deployment. Also, strong cash flows have enabled the company to undertake several strategic initiatives such as buyouts and mergers, which position it well for long-term growth.

The recent dividend hike further reinforces the company’s sound financial prospects. Brown & Brown exited second-quarter 2020 with a sturdy cash balance of $623.2 million, which increased 15% from 2019-end level.

Shares of Brown & Brown, which carries a Zacks Rank #3 (Hold), have gained 27.6% in a year compared with the industry’s growth of 9.9%. The company’s efforts to expand capabilities and extend geographic footprint through several buyouts, and solid capital position should continue to drive shares higher.

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Stocks to Consider

Some better-ranked insurance stocks include Arthur J. Gallagher & Co. AJG, CNO Financial Group, Inc. CNO and First American Financial Corporation FAF, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Arthur J. Gallagher has a trailing four-quarter earnings surprise of 11.1%, on average.

CNO Financial has a trailing four-quarter earnings surprise of 20.09%, on average.

First American Financial has a trailing four-quarter earnings surprise of 20.84%, on average.

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Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.

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