This Dividend King Just Raised Its Payout for the 50th Time

Earlier this year, the property and casualty insurer RLI Corp. (NYSE: RLI) raised its annual dividend for the 50th consecutive year, joining an elite group of companies known as Dividend Kings. This is no small feat, considering the company has managed to pay dividends for numerous decades, through recessions and market crashes.

Being a Dividend King also provides a strong track record that will appeal to dividend investors only investing in companies for passive income. It also makes management very conscious of the company's dividend, as they know it's a significant part of the thesis for investors evaluating the stock. Here's more about RLI Corp.

Image source: Getty Images.

A solid business facing some headwinds this year

A company with a roughly $5.8 billion market cap, RLI's stock is down 21% this year. The company has struggled due to rising tech investments, a competitive insurance market, and higher expected claims resulting from more frequent catastrophes, such as hurricanes.

Still, RLI has grown its operating earnings through the first nine months of the year and has a total combined ratio this year of just slightly more than 85%. The combined ratio divides incurred losses and expenses over earned premiums. A combined ratio under 100% means the company is generating an underwriting profit.

Over the last 12 months, RLI has had a dividend yield of approximately 1% and a free cash flow yield of nearly 10%. This means there is ample room for the company to keep growing the dividend for many decades to come. However, a 1% dividend yield is not very high, so there are likely better Dividend Kings out there to invest in.

Bram Berkowitz has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.