Where does Progressive Insurance rank after its 29% announced dividend increase?

PGRtop100

Progressive Corporation announced a regular quarterly dividend of $0.8882, a 29 percent increase from the prior rate of $0.6862 per share. Progressive pays dividends based on a calculated manner based upon earnings each year. The dividend will be paid at the new higher rate on February 12, 2016, to shareholders of record at close of business on February 3, 2016. The new quarterly dividend payment is double of the payment two years ago. The new higher payment results in a yield of 2.9%

Date Quarterly Dividend
2/3/2016 0.8882
2/2/2015 0.686
1/27/2014 0.493
1/23/2013 0.284
1/24/2012 0.407
1/25/2011 0.399
12/16/2010 1 (special)
1/25/2010 0.161

 

Category Value Score
Dividend Yield 2.90% 75
Dividend Growth (5 yr avg.) 12.0% 62
Forward P/E 15.9 52
S&P Financial Rating A+ 200
Beta 0.83 175
Total Score 564

Analysis of Valuation of Progressive Corp. (Symbol PGR).

Price 1/28/16 %  Yield Div. Growth Rate  BV    2016 P/BV Ratio 10 yr P/BV  Low 10 yr P/BV  High 5 yr max Yield % 5 yr lowest Yield %
$30.36 2.90% 12% 14.35 2.47 1.95 4.15 3.13% 1.77%

Final Analysis;

  • Progressive’s dividend yield is above the average of the S&P 500 Index and is trading at its average historical dividend yield.
  • Progressive maintains a 3 year dividend variable growth rate of 10%.
  • Progressive is trading at a modest forward P/E ratio but at a lower price/book (P/B) ratio.  From a relative valuation perspective based upon P/B, Progressive is undervalued.
  • Progressive maintains a credit rating of A+. This is investment grade, a positive.
  • Progressive maintains a beta of 0.82, lower than the average company.

Based upon its low beta, solid financial rating, low P/B ratio, and high dividend yield, Progressive qualifies as a Top 100 Dividend Stock.

 

Explanation:  Dividend growth financial stocks may be valued upon historical relative price/book value and current yield analysis. Dividend financial stocks trading at a low historical price/book value (P/BV) ratio should be viewed more highly to investors due to their depressed valuation versus other higher P/BV ratio stocks.  Max P/BV price target is based upon company reaching its highest historical P/BV ratio.  Dividend stocks should also be viewed favorably when the current yield is above historical readings for the past 10 years. Further information on evaluating dividend growth candidates can be found at http://seekingalpha.com/author/timothy-mcintosh/articles

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