The share price of
) has been on an uptrend since the property and casualty insurer
announced its intention to propose a 3% increase in its quarterly
dividend at the extraordinary general meeting scheduled on May
The said announcement comes within two months time since the
board had declared a 24% increase in quarterly dividend.
Post the final nod from the board of directors, ACE Limited will
pay a quarterly dividend of 65 cents ($2.60 on an annualized
basis), up from the current 63 cents ($2.52 on an annualized
In the past, ACE Limited has maintained a consistent track record
of paying quarterly dividends (paying dividends each quarter
since it became a public company in 1993) and increasing its
dividend payout each year. The current dividend hike is thus not
Based on Friday's closing price of $97.87, the company's
dividend yield is 2.66%, much above the sector equivalent of
2.17%. The company has raised its dividend by about 150% over the
last 5 years. The company intends to pay out around 30% of its
operating earnings to its shareholders.
The dividend hike and new authorization by ACE Limited is duly
supported by the company's sturdy financial position that, in
turn, is backed by continued solid operational performance.
The company delivered positive earnings surprises in all the
quarters of 2013 with an average beat of nearly 16%.
Concurrently, the board of directors also declared a quarterly
dividend of 63 cents per share, payable on Apr 17 to shareholders
of record as on Mar 28, 2014.
Several insurers are treading the same path as ACE Limited by
announcing dividend increases. They foresee these hikes as
strategies to retain investor confidence as well as attract new
investors. Recently, the board of directors of
AmTrust Financial Services, Inc
) increased its dividend by 43% to 20 cents per share.
The board of directors of
XL Group plc
) called for a 14.3% hike in its quarterly dividend to 16 cents
per share. Furthermore, the board of directors of
Infinity Property and Casualty Corp
) approved a 20% increase in its quarterly cash dividend to 36
cents per share.
Shares of ACE Limited have gained almost 3.5% since Jan 28 when
it reported another quarter of strong results. With the company's
efforts to boost shareholder value, we expect the momentum to
continue asserting investor confidence in the company. The
company envisions 1.5 billion share buybacks in 2014.
ACE Limited returned $290 million to shareholders via share
repurchases in 2013, much higher than $7 million shares bought
back in the 2012. The company has already bought back $326
million shares since Jan 1, 2014 through Feb 27, 2014 and is left
with $1.62 billion under its authorization.
ACE LIMITED (ACE): Free Stock Analysis Report
AMTRUST FIN SVC (AFSI): Free Stock Analysis
INFINITY PPTY (IPCC): Free Stock Analysis
XL GROUP PLC (XL): Free Stock Analysis Report
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There was no earnings momentum over the last 7 days. With the
news of ACE Limited proposing an increased dividend and buyback
program, we expect analysts to raise their estimates exerting
upward pressure on the Zacks Rank. ACE Limited presently carries
a Zacks Rank #2 (Buy).