■ Increase · September 4, 2026
American Financial Group Raises Dividend 10.2%, Continues Buybacks
American Financial Group (AFG) increased its dividend by 10.2% in August 2026 and repurchased $86 million in stock during the first half, signaling confidence amid rising competition.
Dividend Increase and Share Repurchases
American Financial Group (AFG), a property and casualty insurer with a market capitalization of $11 billion, announced a 10.2% dividend increase in August 2026, extending its streak of annual dividend hikes to 21 years. The company's dividend yield stands at approximately 2.5%, above the market average. In addition to the dividend raise, AFG continued its share repurchase program, buying back $26 million of stock in the second quarter of 2026, following $60 million in the first quarter, for a year-to-date total of $86 million.
Underwriting Performance and Industry Trends
AFG's combined ratio—a key measure of underwriting profitability—improved to 91.6% in the second quarter of 2026, down from 93.1% in the same period of 2025. A combined ratio below 100% indicates an underwriting profit. However, the ratio rose sequentially from 90.4% in the first quarter of 2026. Industry data from Marsh indicates that the property and casualty market is becoming more competitive, with property insurance rates falling 12% in the second quarter, partially offset by a 2% increase in casualty rates. This pricing pressure may impact future underwriting results.
Valuation and Shareholder Returns
Despite the dividend growth, AFG's stock appears reasonably priced relative to its own history. Its price-to-book and price-to-sales ratios are in line with their five-year averages, while the price-to-earnings ratio is only slightly above its longer-term average. The combination of dividend increases and share buybacks supports earnings per share growth, as buybacks reduce the number of outstanding shares. This strategy may help mitigate the effects of potential margin compression from increased competition.
What it means for income investors
For income-focused investors, AFG's consistent dividend growth and ongoing buybacks demonstrate a commitment to returning capital to shareholders. The company's solid underwriting performance and reasonable valuation provide a stable backdrop for its dividend, though industry competition could pressure future results.
Reporting based on: The Motley Fool. Figures verified against market data where available.