Lincoln Hikes Dividend by 60% - Analyst Blog
November 11 2011 - 7:15AM
Zacks
Despite basking in a modest
third quarter, yesterday, the board of Lincoln
National Corp. (LNC) has announced a significant 60%
increase in its quarterly dividend to 8 cents per share from the
previous pay
out of 5 cents. The hiked dividend will be paid on February 1, 2012
to shareholders of record as on January 10, 2012.
This marks the second
dividend hike since 2007. In November last year, Lincoln had raised
its quarterly dividend from 1 cent to 5 cents per share. The
company’s restructuring initiatives taken up last year have paid
off well. The current hike also reflects Lincoln’s capital and
liquidity strength.
With a quarterly operating
return on equity (ROE) of 13.4% at the end of third quarter 2011,
up from 9.4% at the end of the prior-year quarter, Lincoln has
strengthened its balance sheet and cash position. This is primarily
attributable to improved consolidated deposits and net inflows that
also drove the book value per share.
The upsides have also
helped Lincoln deploy excess capital efficiently. Earlier, during
the fourth quarter of 2010, the company had announced its objective
of buying back common equity shares worth approximately $125
million, over the following 15 months. However, Lincoln has
successfully repurchased 14.2 million shares for a total cost of
$300 million, until the third quarter of 2011.
Earnings
Review
Lincoln’s third quarter operating
earnings of $1.00 per share came in modestly ahead of the Zacks
Consensus Estimate of 93 cents and 63 cents recorded in the
prior-year quarter. Meanwhile, operating net income surged 53.9%
year over year to $317.3 million.
Besides, the Zacks Consensus
Estimate for the fourth quarter is currently pegged at 97 cents,
expected to increase about 19% over the year-ago period. Over the
last 30 days, 4 of the 15 analyst firms have raised their
estimates, while 7 downward revisions were witnessed. For 2011,
earnings are projected to jump about 32% to $4.14 per share over
2010.
On Thursday, the shares of Lincoln
closed at $19.54, up 4.3%, on the New York Stock Exchange. At this
price and the hiked dividend, Lincoln’s dividend yield stands at
0.41%, up from the previous yield of 0.26%. However, this dividend
yield is significantly lower than Prudential Financial
Inc.'s (PRU) 2.66% and MetLife Inc.’s
(MET) 2.10%, the two major insurance giants.
Besides, the quantitative Zacks
rank for Lincoln currently stands at #3, indicating a short-term
Hold rating. The long term stance also remains Neutral.
Industry Moves
Most of the other insurers in the
industry have been efficiently deploying capital through dividends
and share repurchases. Last month, Aflac Inc.
(AFL) also announced a 10% hike in its quarterly cash dividend to
33 cents from 30 cents per share.
Earlier this week, Allstate
Corp. (ALL) announced a new share repurchase program worth
$1.0 billion, while Prudential also raised its annual
dividend by 26% to $1.45 from $1.15 per share. Earlier this month,
Amerisafe Inc. (AMSF) extended its share buy back
program to $25 million.
AFLAC INC (AFL): Free Stock Analysis Report
ALLSTATE CORP (ALL): Free Stock Analysis Report
AMERISAFE INC (AMSF): Free Stock Analysis Report
LINCOLN NATL-IN (LNC): Free Stock Analysis Report
METLIFE INC (MET): Free Stock Analysis Report
PRUDENTIAL FINL (PRU): Free Stock Analysis Report
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