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Chubb (CB) Enhances Shareholder Value With 3% Dividend Raise

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In a bid to share more profits with its shareholders, the board of directors of Chubb Limited (CB - Free Report) recently announced a 3% hike in quarterly dividend to 73 cents per share. Shareholders of record as of Jun 22 will have the meatier dividend in their pockets on Jul 13, 2018.

The annualized dividend of $2.92 per share translates into a yield of 2.2% based on the closing price of $134.45 on May 17, 2018. This is substantially above the industry average of 0.6%. Chubb Limited has an impressive track of raising dividends each year. In fact, the company has been paying dividends each quarter since it became a public company in 1993 and has doubled its quarterly dividend since 2010. The latest increase marked the 25th straight year of dividend hikes.

This Zacks Rank #3 (Hold) property and casualty insurer has more than doubled its dividend since 2010, with its yield outperforming the industry average.

Apart from a strong quarterly performance by the companies, lower tax incidence owing to  the new tax rate implementation, widened the scope for more capital deployment.

Chubb also resorts to share buybacks. The company has a $1-billion buyback program under its authorization. The company boasts a strong capital position, helping it engage in such shareholder-friendly moves. The company’s total capital position now exceeds $66 billion.

Shares of Chubb have lost 7.9% year to date, underperforming the industry’s decline of 0.3%. Nonetheless, organic initiatives to ramp up growth, prudent acquisitions and effective capital deployment will likely help the stock rebound.

 

Dividend hikes and share repurchases seem a well-accepted strategy among insurers to instill investor confidence in their stock. Recently, the board of directors of CNO Financial Group, Inc. (CNO - Free Report) hiked its quarterly dividend by 11% while United Fire Group Inc. increased  the same by 10.7%.

Stock to Consider

A better-ranked stock from the property and casualty industry is Alleghany Corporation (Y - Free Report) , sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Alleghany offers property and casualty reinsurance and insurance products in the United States as well as internationally. The company came up with an average four-quarter positive earnings surprise of 17.61%.

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