Allstate (ALL) Rewards Shareholders With a 4.7% Dividend Hike
The Allstate Corporation ALL recently announced that its board of directors increased its cash dividend to 89 cents per share from 85 cents, reflecting a 4.7% jump from the prior payout. The dividend will be paid out on Apr 3, to shareholders on record as of Feb 28.
It has continuously hiked dividends annually for more than a decade. The latest dividend amount translates to $3.56 per share on an annualized basis. Considering the Feb 17 closing price of $135.05 per share, Allstate’s dividend yield currently stands at 2.6% compared with the industry average of 0.4%.
The company also announced quarterly preferred dividends of an aggregate value of $26.3 million on three series of preferred stocks. The preferred dividends will be paid out on Apr 17 to shareholders on record as of Mar 31.
Allstate intends to boost shareholder value with dividend hikes and share repurchases. It paid out dividends of $228 million during fourth-quarter 2022 and made share buybacks of $354 million. The company boasts that it has returned more than $15.5 billion in the past five years to its shareholders.
Despite its moves to boost shareholder value, prudent investors are cautiously watching the stock from the sidelines for now. Declining profits, significant debt burden and other factors are affecting this Zacks Rank #5 (Strong Sell) company.
At fourth quarter-end, Allstate had only $736 million in cash, which slid 3.5% from the figure in 2021 end while debt amounted to $7,964 million. Its high debt level remains a concern, which results in increased interest expenses. Further, its cash used in operations was $567 million in 2022, up from $530 million in 2021 and against an operating cash flow of $384 million in 2020.
Even though Allstate is witnessing a significant rise in revenues, profits are falling, due to auto insurance underwriting losses, reduced net investment income and an elevated expense level. The company incurred an adjusted loss of 97 cents per share in 2022, while earnings of $13.48 per share were reported in 2021.
Price Performance
The stock has declined 0.4% in the year-to-date period against 0.4% rise of the industry.
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Stocks to Consider
Some better-ranked stocks in the broader finance space are Arch Capital Group Ltd. ACGL, Aon plc AON and Prudential Financial, Inc. PRU, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Pembroke, Bermuda-based Arch Capital provides insurance products around the globe. The Zacks Consensus Estimate for ACGL’s 2023 earnings is pegged at $6.01 per share, which witnessed two upward estimate revisions in the past 30 days against none in the opposite direction.
Headquartered in Dublin, Ireland, Aon is a leading global insurance broker. The Zacks Consensus Estimate for AON’s 2023 earnings indicates 8.7% year-over-year growth. It beat earnings in three of the past four quarters and missed once, with the average surprise being 2.1%.
Based in Newark, Prudential Financial is a provider of insurance and related financial products. The Zacks Consensus Estimate for PRU’s 2023 earnings suggests 27.3% year-over-year growth. It has witnessed three upward estimate revisions in the past 30 days against one movement in the opposite direction.
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