) announced a 30% hike in its quarterly dividend to 37.5 cents
per share, beginning first quarter 2013, from 28.75 cents paid
earlier. This amounts to an annualized dividend yield of 2.4%
based on the closing share price of $62.71 on Feb 21, 2013.
The increased dividend will be paid on Mar 25, 2013 to
shareholders of record as of Mar 8. The new quarterly dividend
requires a payout of $1.50 per share every year, compared with
$1.15 needed earlier.
However, WellPoint has sufficient cash balance and strong cash
flow to support its capital deployment plans. The company exited
2012 with cash and cash equivalents of $2.48 billion and
generated operating cash flow of over $2.7 billion during the
WellPoint expects to return almost $2 billion to shareholders
in the form of dividends and share repurchase in 2013. Its strong
capital and cash position have fueled cash dividends and stock
repurchases. The company initiated cash dividends in early 2011.
It has also been aggressively buying back shares over the recent
years and is constantly utilizing its excess capital to boost
WellPoint spent $2.5 billion for repurchasing 39.7 million
shares in 2012. Moreover, the total amount spent on dividend
payment in 2012 was $367.1 million. As of Dec 31, 2012, the
company had shares worth approximately $1.8 billion remaining
under its repurchase authorization.
WellPoint currently carries a Zacks Rank #3 (Hold). Other
health management organizations worth considering are
Coventry Health Care Inc.
). All these companies carry a Zacks Rank #2 (Buy).
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