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Chubb (CB) to Reward Shareholders with 2.9% Dividend Hike

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The board of directors of Chubb Limited CB recently announced that it will propose a 2.9% increase in its annual dividend at the annual general meeting. If approved, this will be the 24th straight year of dividend increases by the company. As expected, the announcement found favor with investors, driving shares up by 0.5% in the last two trading sessions.

If approved, Chubb will pay a quarterly dividend of 71 cents ($2.84 on an annualized basis) compared with 69 cents ($2.76 on an annualized basis) paid currently.

Chubb has an impressive track record of paying quarterly dividends and increasing its dividend payout each year. It has more than doubled its quarterly dividend since 2010. The company’s sustained solid operational performance continues to support its capital deployment initiatives and in turn, increases shareholders’ value. Chubb aims to achieve a dividend payout ratio of 30% of its operating earnings.

Based on closing price of $138.41 as of Feb 24, the company’s dividend yield is 2.05%. This is much above the industry average of 1.40%.

The board of directors also declared a quarterly dividend of 69 cents per share to shareholders on record as of Mar 31, 2017. The dividend will be paid on Apr 21, 2017.

Apart from continuous dividend increases, this Zacks Rank #3 (Hold) insurer aggressively buys back shares to boost its bottom line. The company now has a $1 billion share buyback program under is authorization.

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

Shares of Chubb have outperformed the Zacks categorized Property, Casualty and Title Insurance industry, year to date. While Chubb shares appreciated 4.75%, the industry gained 4.35%. However, the Zacks Consensus Estimate has been revised downward over the last few weeks. Hence, the company’s announcement the divided hike and share buyback program is a prudent move to retain investor confidence in the stock.

Several insurers have hiked their dividend to reward their shareholders. This month the board of directors of AXIS Capital Holdings Limited AXS approved a share repurchase program of $1billion at the earnings release. The buyback plan is effective through Dec 31, 2017. Another insurer, Willis Towers Watson plc , approved a 10% increase in dividend to 53 cents per share. Also, the board of directors of XL Group plc XL increased its dividend by 10% to 22 cents and approved a $1 billion share buyback program.

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