Zacks_Analysts' Blog : Delphi Hikes Dividend - Analyst Blog

Yesterday, employee benefits provider Delphi Financial Group Inc. (DFG) announced a quarterly dividend of 12 cents, marking a single cent increase from the previous quarter. The new dividend, representing a 9% hike from the previous quarterly dividend, is payable on June 8, 2011 to shareholders of record as of May 25, 2011.

With an increased annual dividend of 48 cents per share, Delphi ’s dividend yield stands at 1.6%. Delphi has been consistently increasing dividends since its initiation of dividend payment in 2001. The company has hiked its annual dividend by an average of 16.7% over the past five years.

Delphi’s balance sheet solidity is derived from its long-tail and stable group insurance liability. Its low debt-to-capital ratio, which currently stands at 18%, also accounts for its inherent strength.

Delphi had an excellent result for first quarter 2011, with solid production and premium. Book value per share increased 2.9% from the prior quarter to $27.35 as of March 31, 2011. Operating earnings came in at 91 cents per share, in line with the Zacks Consensus Estimate. Results for the quarter benefited from improving payroll trends in small case market niche at Reliance Standard and continued market share gains for Safety National’s products.

Delphi competes with life as well as property and casualty insurers. Reinsurance Group of America Inc. (RGA), StanCorp Financial Group Inc. (SFG), Torchmark Corp. (TMK), and Unum Group (UNM) are some of the life insurance peers of Delphi. Its property and casualty competitors are American Financial Group, Inc. (AFG), American Safety Insurance Holdings Ltd.(ASI), and W.R. Berkely Corp. (WRB).

The stock of Delphi carries a Zacks Rank #2, which translates into a Buy rating over the near term. However, over the longer term (6+ months), we rate the stock Neutral.