Yahoo Finance Chubb (CB) Board of Directors to Propose 3.6% Dividend Hike
Chubb Limited CB board looks to increase its annual dividend at the annual general meeting. This hike, if approved, will mark the 30th consecutive dividend increase by one of the world’s largest providers of property and casualty (P&C) insurance and reinsurance and the largest publicly traded P&C insurer based on market capitalization.
On approval of the same, Chubb will pay out a quarterly dividend of 86 cents ($3.44 on an annualized basis) compared with the current dividend of 83 cents ($3.32 on an annualized basis).
Chubb has a stellar track record of paying quarterly dividends and raising its dividend payout each year. Chubb has more than doubled its quarterly dividend since 2010, reflecting sustained solid operational performance. Based on the closing price of $208.60 as of Feb 23, the insurer’s dividend yield is 1.6%, much above the industry average of 0.3%.
Notably, Chubb’s dividends have witnessed an eight-year CAGR (2022-2023) of 2.4%. New business, strong renewal retention, well-performing commercial businesses, focus on capitalizing on the potential of middle-market businesses and several distribution agreements that have expanded its network boost its market presence and should help retain the momentum.
Concurrently, the board of directors also declared a quarterly dividend of 83 cents per share. The dividend will be paid out on Apr 10 to shareholders of record as of Mar 17.
Apart from continuous dividend increases, Chubb aggressively buys back shares to boost its bottom line. Chubb returned over $4.39 billion to shareholders, including $1.38 billion in dividends and $3.01 billion in share repurchases in 2022.
Chubb has maintained a sturdy balance sheet and financial flexibility, including consistent cash flow generation, for the past many years. The insurer’s cash flow has been increasing over the years. This has paved the way for prudent capital deployment measures. CB had $2 billion cash balance at the end of fourth-quarter 2022, up 21.3% from 2021 end level.
Return on equity, a profitability measure to identify how tactically a company is utilizing its shareholders’ funds, was 9.4% for Chubb in 2021, up 310 basis points year over year.
Shares of this Zacks Rank #3 (Hold) property and casualty insurer have outperformed the industry in the past year. The stock has gained 0.8% against the industry’s decline of 2.3%. Chubb’s strategic endeavors to drive growth, impressive inorganic story and efficient capital management strategies should help the stock sustain momentum.
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Given the solid capital level of the insurance industry and improving operating backdrop favoring strong operational performance, insurers like Cincinnati Financial Corporation CINF and Radian Group RDN have resorted to effective capital deployment.
Cincinnati Financial’s board of directors approved a dividend of 75 cents per share for the first quarter of 2023, reflecting a 9% increase.
This action sets the stage for the 63rd consecutive year of rising dividend payments. This reflects Cincinnati Financial’s strong operating performance, the board's positive outlook and confidence in outstanding capital, liquidity and financial flexibility. Shares of CINF have lost 1.6% in the past year
The board of directors of Radian Group approved a 12.5% hike in its annual dividend. With this, the payout now stands at 22.5 cents per share, compared with the earlier payout of 20 cents per share. This is the fourth consecutive year where RDN has increased the quarterly dividend with a total increase of 80% over the past three years.
The multi-line insurer maintains a solid balance sheet with sufficient liquidity and strong cash flows. A strong capital position helps Radian Group deploy capital via share repurchases and dividend hikes that enhance shareholders’ value. Radian’s solid cash flow also looks impressive. Shares of RDN have lost 8.6% in the past year.
A Stock to Consider
A better-ranked stock from the same space is AXIS Capital Holdings Limited (AXS), sporting a Zacks Rank 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for AXIS Capital’s 2023 earnings is pegged at $7.53 per share, indicating a 29.6% increase from the year-ago reported figure on 11% higher revenues of $5.9 billion. The consensus estimate for 2024 earnings is pegged at $8.42 per share, indicating an 11.8% increase from the year-ago reported figure on 5.1% higher revenues of $6.2 billion.
The expected long-term earnings growth rate is 5%. AXIS Capital eyes a low-90s combined ratio to fuel attractive ROE. Shares have gained 9% in the past year.
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Chubb Limited (CB) : Free Stock Analysis Report
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Radian Group Inc. (RDN) : Free Stock Analysis Report
