FBL Financial (FFG) To Add Investors' Value Via More Profits

The board of directors of FBL Financial Group Inc. (NYSE:FFG) has approved a special dividend, a quarterly raise and a share repurchase authorization. These effective capital deployment moves reflect the company’s concerted efforts to enhance shareholders’ value.

With a 4.5% hike, the company will pay out a meaty dividend of 46 cents per share on Mar 29 to shareholders of record on Mar 15. Based on the Mar 1 closing price of $65.20, the annualized dividend of $1.60 has a yield of 2.82%, above the industry average of 1.99%.

FBL Financial Group has a solid track record of increasing its dividend, which witnessed a 10-year CAGR of about 13.9%.

The company’s board has also announced a special dividend of $1.50 per share. Notably, the insurer has been paying the same for the last four years. To that end, it deploys excess capital to make the special payout. At 2017-end, the company had about $40 million of excess capital.

Concurrently, a $50-million share buyback program was also sanctioned by the company. However, the new program that remains open till Mar 31, 2022, will come into effect once the previous authorization expires on Mar 31, 2018.

FBL Financial Group’s stable balance sheet position, cushioned with a solid substantial operational performance, will likely support its payout. To its credit, this Zacks Rank #2 (Buy) multi-line insurer delivered positive surprises in two of the last four quarters with an average beat of 1.54%. The company exited 2017 with record net income and non-GAAP operating income.

Shares of FBL Financial Group have underperformed the industry year to date. The stock has lost 6.4%, wider than the industry’s 5.1% decline. We expect the company’s shareholder-friendly endeavors to help rebound the stock.

A favorable operational result and a robust capital status have prompted several insurers to share more profits with the respective shareholders. Recently, the board members of Chubb Limited (NYSE:CB) have announced that it will propose a 2.8% raise in annual dividend while Assured Guaranty Ltd (NYSE:AGO) has approved a 12% increase in quarterly dividend. The board of Willis Towers Watson Public Limited Company (NASDAQ:WLTW) too has of late hiked its quarterly dividend by 13% as well as approved a $400-million addition to its share buyback program.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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