The board of directors of Chubb Limited CB has recently announced that it will propose a 2.8% increase in annual dividend at the annual general meeting. If approved, this will be the 25th straight year of dividend hikes by the company. As expected, the announcement found favor with investors, driving up the shares by 0.7% in the last trading session.
If approved, Chubb will pay a quarterly dividend of 73 cents ($2.92 on an annualized basis) compared with 71 cents ($2.84 on an annualized basis) paid currently.
Chubb has an impressive track record of paying quarterly dividends and raising its dividend payout each year, thereby witnessing a five-year CAGR of 13.5%. The company's sustained solid operational performance continues to support its capital deployment initiatives and in turn, adds to shareholders' value. Chubb aims to achieve a dividend payout ratio of 30% of its operating earnings.
Based on the closing price of $144.01 as of Feb 23, the company's dividend yield is 2.03%, much above the industry average of 0.81%.
Concurrently, the board members also announced a quarterly dividend of 71 cents per share to be paid on Apr 20, 2018 to shareholders of record as of Mar 29, 2018.
Apart from continuous dividend increases, this Zacks Rank #3 (Hold) insurer aggressively buys back shares to boost its bottom line. The company now has a $1-billion share buyback program under is authorization.
Shares of Chubb have underperformed the industry
in a year. While the stock has gained 6.7%, the industry has rallied 16%. However, the Zacks Consensus Estimate has moved north in the last four weeks. While the consensus mark for 2018 has been revised 1.1% upward, the same for 2019 has been inched 1.5% upward.
The company's announcement of the dividend hike and its share repurchase program are a couple of prudent strategies to retain investor confidence in the stock.
Several insurers have hiked dividend to reward shareholders. Recently, the board of Assured Guaranty Ltd AGO has approved a 12% increase in its quarterly dividend.
Stocks to Consider
Two better-ranked stocks from the property and casualty industry are Alleghany Corporation Y and American Financial Group, Inc. AFG , both sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here .
Alleghany engages in property and casualty (P&C) reinsurance and insurance businesses in the United States and internationally. The company came up with a 30.47% earnings surprise last quarter.
American Financial engages primarily in property and casualty insurance with focus on specialized commercial products for businesses. Last quarter, the company delivered a positive surprise of 33.33%.
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Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report D/B/A Chubb Limited New (CB): Free Stock Analysis Report Alleghany Corporation (Y): Free Stock Analysis Report American Financial Group, Inc. (AFG): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research