In its concerted effort to enhance shareholder value,
) intends to boost its dividend. The board of directors will
propose a 24% increase in quarterly dividend at the extraordinary
general meeting scheduled on Jan 10, 2014.
ACE Limited, if approved, will now pay a quarterly dividend of 63
cents ($2.52 on an annualized basis), up from 51 cents ($2.04 on
an annualized basis). Previously, in May 2013, the board had
announced a 4% increase in quarterly dividend from 49 cents
($1.96 on an annualized basis).
In the past, ACE Limited has maintained a consistent track record
of paying quarterly dividends and increasing its dividend payout
each year. The current dividend is thus not an exception. Based
on yesterday's closing price of $101.53, the company's dividend
yield is 2.48%, much above the industry equivalent of 2.06%. The
company intends to pay out around 30% of its operating earnings
to its shareholders.
Besides the dividend hike, the board of ACE Limited also approved
a buyback program, authorizing the company to repurchase $2
billion worth of shares through Dec 31, 2014. The current program
replaces the earlier one that has $228 million remaining through
Dec 31, 2013.
ACE Limited eyes repurchase of $1.5 billion worth of shares by
2014-end. In the first nine months, the company spent $233
million to repurchase 2.7 million shares.
The dividend hike and new authorization by ACE Limited is duly
supported by the company's sturdy financial position. Cash and
cash equivalent increased nearly 25% from 2012-end to $768
million at third-quarter end. Retained earnings also stand solid
at $12.8 billion, improving 38%. A sustained solid operational
performance continues to cushion the company's sturdy financial
Several insurers are treading the same path as ACE Limited by
announcing dividend increase or share repurchases authorizations.
They foresee these as strategies to retain investor confidence as
well as attract new investors. Recently, property and casualty
Montpelier Re Holdings Ltd.
) approved a 9% increase in its quarterly dividend to 12.50 cents
per share and also raised its share buyback authorization by $150
While the board of directors of
Everest Re Group Ltd
) increased its quarterly dividend by 56% to 75 cents per share,
the board of
) approved a share buyback program whereby the company is
authorized to repurchase shares worth $600 million.
ACE LIMITED (ACE): Free Stock Analysis Report
ASSURANT INC (AIZ): Free Stock Analysis
MONTPELIER RE (MRH): Free Stock Analysis
EVEREST RE LTD (RE): Free Stock Analysis
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ACE Limited has been on an uptrend since it reported solid
third-quarter earnings on Oct 23. Shares have gained almost 5%
since Oct 23. With the company's efforts to boost shareholder
value, we expect the momentum to continue asserting investor
confidence in the company. ACE Limited returned $576 million to
shareholders via share buyback and dividend in the first nine
months of 2013, higher by 16% year over year.
There was no earnings momentum over the last 7 days. With the
news of proposing increase in dividend and approving the new
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).