Allstate Ramps Up Quarterly Dividend By 50%; Street Sees 20% Upside

Allstate Corp. raised its quarterly cash dividend by 50% to $0.81 per share. Shares of the insurance company closed 1.8% higher on Feb. 22.

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Allstate (ALL) announced that the new dividend will be paid on April 1, to shareholders of record as of March 4.

The company’s annual dividend of $3.24 per share now reflects a dividend yield of 3.08%.

Over the past five years, Allstate rewarded shareholders with $2.9 billion of common dividends and repurchased shares for a total value of $8.5 billion. The company has an existing share repurchase authorization of $3 billion, anticipated to be completed by the end of 2021. (See Allstate stock analysis on TipRanks)

Allstate CFO Mario Rizzo said, “The Board’s confidence in Allstate’s growth strategy and sustainable earnings potential supports this substantial quarterly dividend increase.”

“Allstate’s return on equity is among the highest in the insurance industry and this materially increases our payout ratio and current dividend yield,” Rizzo added.

On Feb. 11, KBW analyst Meyer Shields downgraded the stock to Hold from Buy with a price target of $130 (26% upside potential) citing “slower expected 2021 growth.”

In a note to investors, Shields said, “Allstate’s standard product rollout timeline of almost two years implies slower 2021 premium growth than previously expected.”

The rest of the Street is cautiously optimistic about the stock with a Moderate Buy consensus rating. That’s based on 8 analysts suggesting a Buy and 5 analysts recommending a Hold. The average analyst price target of $125.85 implies 19.5% upside potential to current levels.

TipRanks’ Hedge Fund Trading Activity tool shows that confidence in Allstate is currently Positive as 10 hedge funds increased their cumulative holdings of the stock by 29,900 shares in the last quarter.