Shares of QBE Insurance Group Ltd (ASX: QBE) have been on a tear for investors over the last two months, having skyrocketed 26.5% in that time. The general insurer continued that trend in fine form before the long-weekend, climbing 4.93% to $13.42 on Thursday.
Source: Yahoo! Finance
The positive activity surrounding QBE Insurance Group's stock in recent months largely relates to comments from February when management stated that the group had returned to profitability after years of underperformance and that it was in a good position to produce "stable and predictable earnings" in the future.
That was confirmed once again at the group's Annual General Meeting last week, where management indicated that it could consider increasing its current dividend payout ratio from 50%. Although the strengthening US dollar will likely result in lower premium revenue growth for the year, it said its combined operating ratio shouldn't be materially impacted, while first quarter results are also tracking in line with management's expectations.
Now What: Investors have had to remain patient with QBE, with the group having heavily underperformed the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) in recent years. However, although the stock has risen strongly in recent months, it still appears to be trading at a reasonable price for investors to begin building a position in the insurer.
Additionally, the stock is a great way for investors to play the low interest rate environment. With the Reserve Bank set to reduce interest rates again in the near future, QBE's 3.3% fully franked dividend is looking extra enticing (especially with the prospect of a boost in dividends over the coming years).
