In a concerted effort to return more value to shareholders,
the board of directors of
AXIS Capital Holdings Limited
) approved a share repurchase program along with a hike in
The board approved a dividend of 25 cents per share, which
represents a 4% increase over the last dividend paid. The
increased dividend will be paid on Jan 15, 2013 to the
shareholders of record as of Dec 31, 2012. The company has a
track record of paying dividend every quarter, besides increasing
it every year since 2003. The previous dividend increase was made
in December, last year where a 4% increase was approved as well.
Based on 122.9 million shares outstanding as of Sep 30, 2012, the
company requires $30.7 million for the payment of the quarterly
dividend. Meanwhile, AXIS Capital generated cash flow from
operations of $888 million in the first nine months of 2012,
which is more than adequate for covering the dividend payment.
Following the dividend increase, the yield now comes at 2.8%,
based on the closing share price of $35.81 on Dec 17. It is also
ahead of the industry average of 2.5% and one of its closest
) with a dividend yield of 2.4%.
With the new buyback approval, the company is now authorized to
repurchase $750 million worth shares in the next two years. AXIS
Capital consistently buys back shares. During the third quarter,
it spent $179 million to buy back 5.2 million shares, taking the
tally to 9.4 million shares repurchased for $317 million in the
first nine months. In September last year as well, the board
approved a $750 million share buyback program, of which $236
million still remains to be exhausted.
It is likely that the news of the dividend increase as well as
new share buyback program helped the share price move up by 0.6%.
In the first nine months of 2012, the company paid back $410
million to its shareholders via dividend and share repurchases.
The company continues to expect to generate adequate funds that
can be deployed not only in returning more value to shareholders
but to be directed in avenues that would help the company expand.
Over the last 7 days, 2 of 13 analysts have lowered the estimate
for 2012 and 2013. We believe the company's effort to return more
value to shareholders might encourage analysts to pull their
estimates upward. The Zacks Consensus Estimate for 2012 and 2013
are currently pegged at $3.63 and $3.92 per share, respectively.
Axis Capital carries a Zacks #3 Rank, which translates into a
short-term Hold rating. With optimism over the news to enhance
shareholders value, we expect analysts to raise their estimates,
providing an upward directional pressure on its Zacks Rank.
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