Back to top

Image: Bigstock

AXIS Capital (AXS) Okays Dividend Increase, Share Buyback

Read MoreHide Full Article

The board of directors of AXIS Capital Holdings Limited (AXS - Free Report) approved a 2.4% hike in its annual dividend in its continued effort to boost shareholders value. With this, the payout now stands at 43 cents per share compared with the earlier payout of 42 cents per share.

The recent hike marked the 18th straight year of dividend hike. Based on the stock’s Dec 2 closing price of $51.64, the new dividend will yield 3.3%, better than the industry average of 0.4%.  The company boasts one of the highest dividend yields among its peers.

With 83.4 million shares outstanding at third-quarter 2021 end, this Zacks Rank #3 (Hold) insurer will need to dish out $35.8 million quarterly. Shareholders of record as of Dec 30, 2021 will receive the meatier dividend on Jan 18, 2022

Since AXIS Capital went public in 2003, this leading specialty insurer and global reinsurer aiming leadership in specialty risk has increased dividend each year, reflecting operational excellence and its commitment to return value to its shareholders. AXS’ dividend witnessed an 18-year CAGR of 7.1%.

Effective capital deployment is supported by AXIS Capital’s balance sheet strength. Apart from dividend payouts, AXS also buys back shares. Thus, concurrent with the dividend hike, the board of directors approved a $100 million share buyback program through 2022.

Axis Capital should be able to continually enhance shareholders value, riding on Specialty Insurance, Reinsurance plus Accident and Health, exiting underperforming lines, investing in more attractive markets, and entering new markets thus improving portfolio mix and underwriting profitability.

Shares of AXIS Capital have gained 2.5% year to date compared with the industry’s increase of 6.4%. Operational excellence and solid capital position should help shares trend higher.

Zacks Investment ResearchImage Source: Zacks Investment Research

Given the solid capital level of the insurance industry and an improving operating backdrop favoring strong operational performance, insurers like Primerica, Inc. (PRI - Free Report) , Lincoln National Corporation (LNC - Free Report) and Aflac Incorporated (AFL - Free Report) have resorted to effective capital deployment to enhance shareholders’ value.

The board of directors of Primerica authorized a $275 million share buyback program through next year. Operational excellence backed by solid market presence, growing business and a strong business model should continue to support Primerica in generating enough capital to return to shareholders continually.  Total stockholder return has continually outperformed the S&P 500 Index over the last five years. Primerica has also raised dividends 10 times in the last nine years.

Lincoln National’s board approved a $1.5 billion share buyback program. A robust financial position driven by a sound balance sheet and strong cash generation capabilities over the years has enabled Lincoln National to engage in accelerated and prudent capital deployment measures.

Aflac’s board of directors approved a 21.2% dividend hike. Aflac’s regular share buybacks and dividends hikes highlight its sound liquidity position fueled by sustained superior operating results at U.S segment and cost-curbing initiatives.

Shares of PRI, LNC and AFL have gained 10.9%, 31.8% and 24.3% year to date.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.