Riding on a solid full-year 2013 and improved first-quarter 2014
results, insurance brokerage giant -
Marsh & McLennan Cos. Ltd.
) announced incremental deployment of excess capital, thereby
boosting shareholder returns.
Adding to shareholder value and confidence, the board of Marsh
& McLennan sanctioned a new share repurchase program worth $2.0
billion without any expiry period. Including $463 million of stock
at the end of Mar 2013, the company now shares over $2.46 billion
available for repurchases.
Previously, Marsh & McLennan had authorized a share buyback
worth $1.0 billion in May 2013, out of which, $100 million of
shares were repurchased in first-quarter 2014.
Hike in Dividend Payout
Furtherinflating shareholder return, Marsh & McLennan hiked
its quarterly dividend by 12% to 28 cents per share from the prior
25 cents, now shelling out $1.12 per share annually. The raised
quarterly dividend will be paid on Aug 15, 2014 to shareholders of
record as on Jul 11.
So far, Marsh & McLennan's dividend payouts have grown at a
CAGR of 6.7% for 2007−2014. Additionally, the company paid
dividends worth $137 million during first-quarter 2014, higher than
$127 million paid in the year-ago quarter.
Moreover, the hike comes within a year of the last increase of
9% in Aug 2013, before whichMarsh & McLennan had raised its
dividend by 5% in May 2012.
At Thursday's closing price of $48.82, the company's dividend
yield stands at 2.29%, up from the previous 2.0%. The new dividend
yield is also higher than that of Marsh & McLennan's peer,
) 1.21%, based on the latter's closing price on Thursday. Last
month, Aon had also increased its dividend by 43% to 25 cents per
With cash of $1.38 billion and higher retained earnings at the
end of Mar 2013, Marsh & McLennan remains decently liquid.
Moreover, the company's well-executed restructuring initiatives,
modest organic growth and low capital requirements support
efficient capital deployment that includes acquisitions.
Subsequently, the stock has also been witnessing modest traction
as Marsh & McLennan outperformed the one-year S&P 500 index
that projected growth of 14.5%, by yielding a return of 23.7%.
Currently, Marsh & McLennan carries a Zacks Rank #3 (Hold).
However, Aon and some more better-ranked peers, including
Blue Capital Reinsurance Holdings Ltd.
Erie Indemnity Co.
), bear a Zacks Rank #2 (Buy).
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