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AXIS Capital (AXS) Okays Share Buyback, Ups Dividend by 2.3%

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The board of directors of AXIS Capital Holdings Limited (AXS - Free Report) approved a 2.3% hike in its annual dividend in its continued effort to boost shareholders value. With this, the payout now stands at 44 cents per share, compared with the earlier payout of 43 cents per share. Shareholders of record as of Dec 30, 2022 will receive the meatier dividend on Jan 18, 2023.

The recent hike marked the 19th straight year of dividend hike. Based on the stock’s Dec 8 closing price of $57.56, the new dividend will yield 2.9%, better than the industry average of 0.4%. This Zacks Rank #3 (Hold) insurer boasts one of the highest dividends yield among its peers.

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 has consistently hiked its dividend with the metric witnessing a nine-year (2014 – 2022) CAGR of 5.6%.

Effective capital deployment is supported by AXIS Capital’s balance sheet strength. Apart from dividend payouts, AXS also buys back shares. In the first nine months of 2022, it repurchased shares for $49 million, including $35 million repurchased pursuant to the authorized share repurchase program. As of Sep 30, 2022, the company had $65 million of remaining authorization under the authorized share repurchase program for share repurchases through Dec 31, 2022. Thus, concurrent with the dividend hike, the board of directors approved a $100 million share buyback program through Dec 31, 2023.

Axis Capital should be able to continually enhance shareholders value, riding on Specialty Insurance, Reinsurance plus Accident and Health, investing in more attractive markets, and entering new markets thus improving portfolio mix and underwriting profitability. The insurer remains focused on growth in Marine Cargo, Cyber and Renewable Energy, which is likely to provide strong double-digit Return on equity (ROE) opportunities.

ROE, a profitability measure of how efficiently a company utilizes its shareholders money, was 12.5% in the trailing twelve months, up 690 basis points year over year and better than the industry average of 6.6%.

Shares of AXIS Capital have gained 10.2% in the past year, outperforming the industry’s increase of 7.3%. Operational excellence and solid capital position should help shares trend higher.

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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) , Assurant, Inc. (AIZ - Free Report) and RLI Corp. (RLI - Free Report) have resorted to effective capital deployment in November 2022 to enhance shareholders' value.

The board of directors of Primerica authorized a share buyback program that will allow the company to spend up to $375 million to repurchase its common stock through 2.23. Riding on the strength of its business model, Primerica is well-poised to cater to the middle market's increased demand for financial security.

Assurant approved a 2.9% hike in its quarterly dividend in a bid to enhance shareholder value. The dividend hike highlights AIZ’s commitment toward prudent capital management, reflecting its sustained operational performance over a period of time and its sound financial prospects. Besides the regular dividend hike, Assurant remains committed to returning excess cash to shareholders through share repurchases.

RLI declared a special cash dividend of $7 per share, which is expected to total approximately $320 million. RLI has a dividend yield of 0.8%, which betters the industry average of 0.4%. It has been paying dividends for 184 consecutive quarters and increased regular dividends in the last 47 straight years. RLI’s sound capital structure helps it to boost shareholder returns.

Shares of RLI has gained 16.4% in the past year, whereas that of PRI and AIZ have lost 16.1% and 7% respectively.

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

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