Dividend Growth Stock Overview: Mercury General Corporation

Mercury General offers a wide variety of insurance products, including classic auto insurance.
Photo courtesy Greg Gjerdingen/flickr.com.

About Mercury General Corporation

Mercury General Corporation is an independent broker and writer of insurance products across 13 states. Mercury General has assets of over $4 billion and provides homeowners, personal umbrella, rental, condo, mechanical breakdown, and personal and commercial automobile insurance.

Mercury General was formed in 1961 and wrote its first policy in April 1962. The company went public in 1985 with an IPO on the NASDAQ. In 1996, Mercury moved to the New York Stock Exchange. Mercury currently has over 6,700 agents selling insurance.

Mercury, under the leadership of founder and Chairman George Joseph, prides itself on building trust with its customers and was recognized as one of America’s Most Trustworthy Companies by Forbes from 2007 – 2009.

Mercury wrote $2.84 billion in insurance premiums in 2014, up 4.1% from 2013. Despite incurring a loss in the 4th quarter of 2014, net income per share was $3.23, up 58% from 2013’s $2.04.

The company is a member of the S&P Mid Cap 400 index and was added to S&P’s High Yield Dividend Aristocrats index at the beginning of 2015, and trades under the ticker symbol MCY.

Mercury General Corporation’s Dividend and Stock Split History

Mercury Insurance Dividend Growth

After growing its dividends through 2008, Mercury General’ dividend growth has dramatically slowed.

Mercury General began paying dividends in 1986, the year after its IPO, and has increased them each year since then. Since 2009 Mercury General has announced dividend increases at the beginning of November and the stock has gone ex-dividend in the middle of December. At the end of 2014, Mercury announced an extremely small 0.4% increase in the quarterly dividend, from 61.5 cents to 61.75 cents per share, giving the stock a forward annualized dividend of $2.47. I expect Mercury General to announce its next dividend increase in November 2015.

Until 2008, Mercury General grew its dividend quickly, usually more than 10% per year. Since then however, the dividend increases have been minimal and have not exceeded 2% each year. This is reflected in Mercury’s compounded annual dividend growth rate (CADGR) over time. Mercury’s 5-year CADGR is 1.11%, its 10-year CADGR is 5.22% and its 20-year CADGR is 10.25%. According to finviz.com, Mercury’s earnings per share are expected to decrease over time and with a fairly high payout ratio over 60%, the company is unlikely to be able to increase its dividend growth rate in the near term.

Mercury General Corporation has split its stock twice since beginning its record of dividend growth in 1986. The company split its stock 2-for-1 in September 1992 and October 1997. For each share of stock you owned in 1986, you would now have 4 shares of Mercury General stock.

Mercury General’s Direct Purchase and Dividend Reinvestment Plans

Mercury General Corporation does not have a direct purchase or dividend reinvestment plan. In order to invest in Mercury General Corporation’ stock, you’ll need to purchase it through a broker. 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

Mercury General Corporation’s Investor Relations Website

Current quote and financial summary for Mercury General Corporation (finviz.com)

Want to find out about more great dividend growth stocks?

Check out the list of current S&P Dividend Aristocrats.

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