Our analysis is based on comparing United Fire Group, Inc. with the following peers – Loews Corporation, Cincinnati Financial Corporation, Travelers Companies, Inc., CNA Financial Corporation, American Financial Group, Inc., White Mountains Insurance Group Ltd, RLI Corp., Arch Capital Group Ltd., Hanover Insurance Group, Inc. and Erie Indemnity Company Class A (L-US, CINF-US, TRV-US, CNA-US, AFG-US, WTM-US, RLI-US, ACGL-US, THG-US and ERIE-US).
United Fire Group, Inc.’s dividend yield is 2.52 percent and its dividend payout is 56.28 percent. This compares to a peer average dividend yield of 2.57 percent and a payout level of 34.84 percent. This combination of a relatively lower dividend yield and a higher payout ratio suggest that the dividend payout might not be sustainable. The contra-indicator here is the relatively strong dividend quality score of 83 out of a possible score of 100, which points to some ability to sustain the higher payout ratio.
Dividend Quality Overview
- Over the last twelve months (prior to June 30, 2017), UFCS-US paid a high quality dividend, which represents a yield of 2.45% 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 5.00x, provides a substantial cushion in case of a significant reduction of cash flows in the future.
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Over the last twelve months (prior to June 30, 2017), UFCS-US paid a high 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 9.41x), investing cash flow (coverage of -4.28x), issuance cash flow (coverage of -3.72x) and twelve-month prior cash (coverage of 4.59x), for a total dividend coverage of 6.00x.
UFCS-US’s issuance cash flow includes outflows from net share buybacks (coverage of -0.73x). Thus, the total coverage including share buybacks is 6.73x, 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’s dividends are wholly paid from operating and investing cash flows net of any debt repayments, which suggests a high dividend quality.
|Dividend Yield (%)||2.77||2.41||2.65||2.25||1.97||2.52|
|Dividend Payout (%)||37.97||23.15||33.62||24.36||50.26||56.28|
A complete list of metrics and analysis is available on the company page.
United Fire Group, Inc. operates as a holding company, which is engaged in the business of writing property, casualty insurance, life insurance and selling annuities through a network of independent agencies. It provides insurance protection to individuals, businesses and organizations. The company operates its business through two segments: Property and Casualty Insurance, and Life Insurance. The Property and Casualty Insurance segment is comprised of commercial lines insurance, including surety bonds, personal lines insurance and assumed reinsurance. The Life Insurance segment is comprised of deferred and immediate fixed annuities, universal life insurance products and traditional life insurance products. United Fire Group was founded in January 1946 and is headquartered in Cedar Rapids, IA.
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