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Aon's Board Approves 5% Dividend Hike to Reward Shareholders

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In a bid to enhance its shareholder value, the board of directors of Aon plc (AON - Free Report) recently announced that it has hiked its cash dividend on outstanding Class A Ordinary Shares by 5% to 46 cents per share. Shareholders of record on Nov 2, 2020 will receive the meatier dividend on Nov 13, 2020.

This follows the 10% increase in dividend of 44 cents per share approved in the second quarter of 2019. This year will be the 9th consecutive annual dividend increases by Aon.

The insurance broker took this initiative as its buyout of Willis Towers Watson Public Limited Company remains pending. The deal is expected to close in the first half of 2021.

The company’s track record of disbursing capital appears impressive to investors. However, given the COVID-19-led uncertainty, it deferred its share buyback plan, which is why its bottom line will be bereft of the cushion that share repurchase programs provide.

Aon has been taking several initiatives to improve its solvency position. Long-term debt has been continuously rising since 2014 due to an increase in commercial paper outstanding.

The company will not have to pay a major portion of its term debt in the upcoming year, which is a relief.

Aon has witnessed a steady bottom-line improvement over the last many years on the back of its strong fundamentals, such as expansions through buyouts and collaborations, divestitures and a solid financial position. Although in the first six months of 2020, the metric remained flat, we expect the same line to grow in the near term, aided by its core fundamentals, such as strategic initiatives and cost-curbing measures.

Zacks Rank and Price Performance

Shares of this presently Zacks Rank #3 (Hold) company have gained almost 10.1% in the past year, underperforming the industry’s growth of 14.1%. Other companies in the same industry, such as Arthur J. Gallagher & Co. (AJG - Free Report) and Brown & Brown, Inc. (BRO - Free Report) have also rallied 25.3% and 32% in the same time frame. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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