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AON Boosts Shareholder Value, Approves 10% Dividend Hike

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Aon plc’s (AON - Free Report) board of directors recently sanctioned a 10% hike in the quarterly cash dividend, aiming to boost shareholder value. With the latest hike, the payout currently stands at 67.5 cents per share compared with the prior payout of 61.5 cents.

Denoting the 13th consecutive year of a dividend hike, the increased dividend will be paid on May 15, 2024, to shareholders of record as of May 1. Based on the stock’s Apr 12 closing price of $308, the new dividend will yield 0.8% to the company. Aon has been a regular dividend-paying company for more than two decades. Besides, its dividend has witnessed a 12-year CAGR of 14%.

Aon also boasts a robust history of rewarding shareholders in the form of share buybacks as well.  Its Repurchase Program commenced with an initial authorization of $5 billion and has been in place since 2012.

Thereafter, the authorization was further enhanced by $5 billion each in November 2014, June 2017 and November 2020, respectively.  In February 2022, the same was increased by $7.5 billion. At the end of 2023, it had a leftover capacity of roughly $3.3 billion under its Repurchase Program.  

As part of the program, Aon bought back shares worth around $24.2 billion, thereby substantiating its active buyback pursuits.

A strong financial position equips a company to pursue uninterrupted share buybacks and dividend payments. The same has been the case with Aon, which is backed by a solid cash balance and robust cash-generation abilities. As of Dec 31, 2023, AON’s cash and cash equivalents increased 12.8% from the 2022-end level. It generated solid operating cash flows of $3.4 billion in 2023, which advanced 6.7% year over year.  

Shares of Aon have gained 5.8% year to date compared with the industry’s 5.2% growth. AON currently carries a Zacks Rank #3 (Hold).

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Key Picks

Investors interested in the broader Finance space can look at some better-ranked stocks like Ryan Specialty Holdings, Inc. (RYAN - Free Report) , Root, Inc. (ROOT - Free Report) and Brown & Brown, Inc. (BRO - Free Report) , each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for Ryan Specialty’s 2024 full-year earnings indicates a 28.3% year-over-year increase. It beat earnings estimates in two of the past four quarters and met twice, with an average surprise of 5.1%. Also, the consensus mark for RYAN’s 2024 full-year revenues suggests 19.5% year-over-year growth.

The consensus mark for Root’s 2024 full-year earnings indicates a 23.1% year-over-year improvement. The earnings estimate has witnessed one upward estimate revision in the past month against no movement in the opposite direction. Furthermore, the consensus estimate for ROOT’s 2024 full-year revenues suggests 101.8% year-over-year growth.

The Zacks Consensus Estimate for Brown & Brown’s 2024 full-year earnings is pegged at $3.29 per share, which indicates 17.1% year-over-year growth. The estimate jumped 9 cents over the past month. BRO beat earnings estimates in each of the past four quarters, with an average surprise of 11.2%.

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