Our analysis is based on comparing Independence Holding Co. with the following peers – Genworth Financial, Inc. Class A, MetLife, Inc., Lincoln National Corporation, CNO Financial Group, Inc., Prudential Financial, Inc., Kansas City Life Insurance Company and Assurant, Inc. (GNW-US, MET-US, LNC-US, CNO-US, PRU-US, KCLI-US and AIZ-US).
Independence Holding Co.’s dividend yield is 0.58 percent and its dividend payout is 6.03 percent. This compares to a peer average dividend yield of 2.13 percent and a payout level of 15.21 percent. This relatively lagging dividend performance could spur some dividend action going forward – except the company’s current dividend quality score of 58 out of a possible score of 100 is only about average.
Dividend Quality Overview
- Over the last twelve months (prior to September 30, 2017), IHC-US paid a low quality dividend, which represents a yield of 0.44% at the current price.
- Dividend quality trend has not been consistent over the last five years. Dividends were paid during each of these years — of these 4 were high quality and 1 was low quality.
- The ending cash balance, with a dividend coverage of 14.04x, provides a substantial cushion in case of a significant reduction of cash flows in the future.
Quadrant label definitions. Hover to know more
Over the last twelve months (prior to September 30, 2017), IHC-US paid a low quality dividend.
The source of the company’s cash to support the dividend paid over the last twelve months is operating cash flow (coverage of 3.43x), investing cash flow (coverage of 11.45x), issuance cash flow (coverage of -42.87x) and twelve-month prior cash (coverage of 41.86x), for a total dividend coverage of 15.04x.
IHC-US’s issuance cash flow includes outflows from net debt repayment (coverage of -20.16x) and net share buybacks (coverage of -23.41x). Thus, the total coverage including share buybacks is 38.45x, which reflects our assumption that the cash paid for share buybacks is discretionary and could instead be used to pay dividends.
These coverage ratio factors imply that the firm had to dip into the beginning cash balance to pay the dividend, which suggests a low dividend quality.
|Dividend Yield (%)||0.98||0.26||0.51||0.58||0.46||0.58|
|Dividend Payout (%)||6.42||9.09||7.61||5.26||28.52||6.03|
A complete list of metrics and analysis is available on the company page.
Independence Holding Co. engages in underwriting, administering and/or distributing group and individual specialty products, including disability, supplemental health, pet, and group life insurance through its subsidiaries. It operates through the following segments: Medical Stop-Loss, Specialty Health, Group Disability, and Individual Accident and Health, and Other. The Medical Stop-Loss segment are short-duration and accounted for based on actuarial estimates of the amount of loss inherent in that period’s claims or open claims for prior periods, including losses incurred for claims that have not been reported. The Specialty Health segment is the liability for policy benefits and claims for fully insured medical and dental business and are established using historical claim development patterns. The Group Disability segment is comprised of long term disability and disability benefits law. The Individual Accident and Health and Other segment is a combination of closed lines of business as well as certain small existing lines. The company was founded in 1980 and is headquartered in Stamford, CT.
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