Dividend Growth Stock Overview: Brown & Brown, Inc.

Brown & Brown, Inc. provides a wide variety of insurance products in 44 states
across the United States, and in London and parts of the Caribbean.
Photo courtesy Alan Cleaver/flickr.com.

About Brown & Brown, Inc.

Brown & Brown, Inc. is a diversified insurance agency and wholesale broker with operations in 41 states plus offices in London, England; Hamilton, Bermuda; and George Town, Cayman Islands. At the end of 2014, Brown & Brown operated 232 offices, with the largest number in Florida (41), California (24) and New York (17). Brown & Brown does not generally assume underwriting risks; rather the company sells insurance products and related services. There is one exception to this: the company underwrites flood insurance policies that are backed by FEMA or a reinsurance carrier through its Wright National Flood Insurance Company subsidiary.

Brown & Brown has four business segments. The Retail Segment markets and sells insurance products, including property, casualty, life, accident, health and dental insurance, to individual, commercial and public entities. The National Programs Segment sells liability insurance tailored to specialized groups of professionals, such as doctors, dentists and lawyers. It also provides commercial package insurance for automotive service shops, like oil & lube shops, and parts retailers and wholesalers. The Wholesale Brokerage Segment markets and sells excess commercial and personal lines of insurance, including to Brown & Brown retail offices. Finally, the Services Segment provides insurance related services, such as third-party claims administration, claims adjusting, litigation, and Social Security and Medicare benefits advocacy services.

Of the business segments, the Retail Segment is the largest by total revenue, having contributed more than half of Brown & Brown’s 2014 revenue. The National Programs Segment is the 2nd largest segment, contributing nearly a quarter of the company’s 2014 revenue.

The company has expanded extensively through acquisitions, with a total of 39 acquisitions over the last 3 years. As of April, Brown & Brown’s most recent acquisition was the purchase of the assets of Spain Agency, a commercial and personal lines insurance company with annual revenues of $6.5 million. The acquisition expands Brown & Brown’s business in New York State.

As of February 2015, there were over 143.5 million shares of Brown & Brown stock outstanding. Brown family members own 17.8% of the shares.

The company is a member of the S&P Mid Cap 400 index and S&P’s High Yield Dividend Aristocrats index, and trades under the ticker symbol BRO.

Brown & Brown’s Dividend and Stock Split History

Brown & Brown Dividends

Brown & Brown’s dividend growth has slowed recently, but the company has still averaged a dividend growth of over 6% since 2009.

Brown & Brown, Inc. has increased dividends since 1994. The company traditionally announces dividend increases in the 4th quarter of the calendar year, with the announcement and the ex-dividend date in October. Brown & Brown’s most recent dividend increase was in October 2014, when the company increased the quarterly dividend by 10% to an annualized rate of 44 cents per share. I’m expecting Brown & Brown to announce its 22nd annual dividend increase in October 2015.

After a period of very rapid dividend growth from 1999 – 2008, Brown & Brown has slowed its dividend growth, with annual increases ranging from 3.3% to 11%. The company’s compounded annual dividend growth rate (CADGR) over time reflects this, with a CADGR from 2009 – 2014 of 6.27%, but the 10-year and 20-year CADGRs at 10.95% and 13.09%, respectively.

The rapid growth of Brown & Brown’s dividend was reflective of fast company growth during the same time. Brown & Brown split its stock as the company began this period of fast growth, a 3-for-2 split in March 1998. Additional stock splits occurred during this time as well, with the stock splitting 2-for-1 in August 2000, November 2001 and November 2005. A single share of Brown & Brown stock owned at the beginning of 2008 would have split into 12 shares over this period. Brown & Brown has not split its stock since then.

Over the 5 years ending on December 31, 2014, Brown & Brown stock appreciated at an annualized rate of 14.42%, from a split-adjusted $16.72 to $32.79. This outperformed the 13.0% annualized return of the S&P 500 but slightly underperformed the 14.9% annualized return of the S&P Mid Cap 400 index during this time.

Brown & Brown’s Direct Purchase and Dividend Reinvestment Plans

Brown & Brown does not have a direct purchase or dividend reinvestment plan. The company recommends that investors interested in setting up a dividend reinvestment plan for the stock do so through a broker of their choice. Most brokers will allow you to reinvest dividends without any fee. Ask your broker for more information on how to set this up if you are interested.

Helpful Links

Brown & Brown’s Investor Relations Website

Current quote and financial summary for Brown & Brown, Inc. (finviz.com)

 

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