In order to share more profits with shareholders, global risk
management and insurance brokerage provider,
) increased its annual dividend by a significant 43%.
In keeping with this annual hike, management declared a quarterly
cash dividend of 25 cents per share, higher than 18 cents paid on
Feb 17, 2014 to shareholders of record as of Feb 3, 2014. The
increased quarterly dividend will be paid on May 15, 2014, to
shareholders of record as of May 1, 2014.
Based on Friday's closing share price of $79.43, the increased
dividend implies a dividend yield of 1.3%, almost at par with
that of another player in the industry,
Brown & Brown Inc.
With this hike, the current annual dividend equates to $1.00 per
share, up from 70 cents paid in 2013. The last dividend hike was
announced in April 2013 when Aon recorded an 11% increase in its
quarterly dividend. If we peek into the company's history of
dividend hikes, Aon has been paying dividends consistently for a
After recording almost constant dividends since 2002, the
company initiated a 5% dividend hike in 2012. Since then, the
company has not deferred from increasing it dividends, which have
risen at a two-year CAGR of 29%.
AON PLC (AON): Free Stock Analysis Report
BROWN & BROWN (BRO): Free Stock Analysis
ERIE INDEMNITY (ERIE): Free Stock Analysis
MARSH &MCLENNAN (MMC): Free Stock Analysis
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The consistent dividend hikes represent the financial strength
and long-term outlook of the company. Along with dividend
payouts, the company also has a sound share repurchase structure.
Aon has ample liquidity for these payments with operating cash
flow, and cash and cash equivalents at end-2013 being higher than
that in 2012 and a low debt profile. We expect expense and
capital management to continue to boost the operating leverage
and earnings in the upcoming quarters.
Other insurance brokers have been also active in hiking
dividends. Among other industry majors,
Marsh & McLennan, Inc.
) raised its dividend by 8.7% to 25 cents per share in May 2013
Erie Indemnity Co.
) increased its dividend by 7.2% to 64 cents per share in July
Aon currently carries a Zacks Rank #3 (Hold). Erie Indemnity and
Marsh & McLennan are among the better-ranked stocks in the
sector that carry a Zacks Rank #2 (Buy).