In an effort to share more profit with its shareholders, U.S.
) announced a hike of 12.5% in its quarterly cash dividend to
22.5 cents per share. The increased dividend will be paid on Jan
31, 2014 to shareholders of record as of Jan16, 2014.
AETNA INC-NEW (AET): Free Stock Analysis
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Aetna commenced paying dividend in 2001, and maintained a steady
annual dividend of 40 cents per share for a decade. Thereafter,
the company has been increasing shareholders' dividend for the
past three years. It has increased its dividend at a 4-year
CAGR of 118%.
The dividend hike is supported by Aetna's strong balance sheet
with debt lying within its targeted range and its continued
ability to generate significant cash flows. As of Sep 30, the
company had a debt to total capitalization ratio of 38%. The
company expects excess parent company cash projection for 2013 to
approximate $1.25 billion.
Moreover, Aetna has a low payout ratio, which leaves a lot of
room for the company to increase its payout in the future.Aetna's
annual dividend yield is 1.36%, close to the industry dividend
yield of 1.39% per share.
For the first nine months of 2013, Aetna returned nearly $1.2
billion of capital to its shareholders through share buyback and
This increase in Aetna's dividend reflects the long-term
prospects of the company's business and its commitment to
providing value to its shareholders. Through this dividend
payout, Aetna will also be able to attract investors who seek a
refuge from historically low yields on treasury bonds. Such
investors are increasingly searching for high-quality dividend
paying stocks as a means to boost their income.
Earlier during Jun 2013, health insurers
UnitedHealth Group Inc.
) instituted a 32% hike in its quarterly dividend payment and
prior to that in Feb 2013
) made a similar move by pulling up its quarterly dividend by
Aetna carries a Zacks Rank #3 (Hold). A better ranked stock - C
) with Zacks Rank #2 (Buy) is worth considering.