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AON Approves 10% Dividend Hike, Boosts Shareholder Value

With an aim to boost shareholder value, Aon plc’s AON board of directors recently sanctioned a 10% hike in the quarterly cash dividend. With the latest hike, the payout currently stands at 61.5 cents per share compared with the prior payout of 56 cents.

Denoting the 12th consecutive year of a dividend hike, the increased dividend will be paid on May 15, 2023, to shareholders of record as on May 1. Based on the stock’s Apr 14 closing price of $324.48, the new dividend will yield 0.7% to the company.

Aon has been a regular dividend-paying company for more than two decades. Besides, its dividend has witnessed a 12-year CAGR of 12.5%.

Apart from implementing dividend hikes, Aon boasts a robust history of rewarding shareholders in the form of share buybacks as well.  Its Repurchase Program commenced with an initial authorization of $5 billion and has been in place since 2012.

Thereafter, the authorization was further enhanced by $5 billion each in November 2014, June 2017 and November 2020, respectively.  In February 2022, the same was increased by $7.5 billion. At the end of 2022, it had a leftover capacity of roughly $6 billion under its Repurchase Program.

As part of the program, Aon bought back shares worth around $21.5 billion, thereby substantiating its active buyback pursuits.

A strong financial position equips a company to pursue uninterrupted share buybacks and dividend payments. The same has been the case with Aon, which is backed by a solid cash balance and robust cash-generation abilities. As of Dec 31, 2022, AON’s cash and cash equivalents increased 26.8% from the 2021-end level. It generated solid operating cash flows of $3.2 billion in 2022, which advanced 47.5% year over year.

Also, Aon's return on equity — a profitability measure of how prudently the company is utilizing its shareholders’ funds — stands significantly higher than the industry’s average of 31.4%.

Shares of Aon have gained 8.1% year to date compared with the industry’s 4% growth. AON currently carries a Zacks Rank #3 (Hold).


Zacks Investment Research
Zacks Investment Research

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Stocks to Consider

Some top-ranked stocks in the insurance space are Goosehead Insurance, Inc. GSHD, Voya Financial, Inc. VOYA and The Hanover Insurance Group, Inc. THG. While Goosehead Insurance sports a Zacks Rank #1 (Strong Buy), Voya Financial and Hanover Insurance carry a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Goosehead Insurance’s earnings surpassed estimates in two of the last four quarters and missed the mark twice, the average being 79.78%. The Zacks Consensus Estimate for GSHD’s 2023 earnings indicates a 60% rise, while the same for revenues suggests an improvement of 26.7% from the respective prior-year tallies. The consensus mark for GSHD’s 2023 earnings has moved 11.3% north in the past 60 days.

The bottom line of Voya Financial outpaced estimates in each of the trailing four quarters, the average being 38.68%. The Zacks Consensus Estimate for VOYA’s 2023 earnings indicates a 7.1% rise, while the same for revenues suggests an improvement of 6.6% from the respective prior-year tallies.  The consensus mark for VOYA’s 2023 earnings has moved 2.36% north in the past 60 days.

Hanover Insurance’s earnings outpaced estimates in three of the trailing four quarters and matched the mark once, the average being 5.30%. The Zacks Consensus Estimate for THG’s 2023 earnings indicates a 77.8% surge, while the same for revenues suggests an improvement of 7.7% from the respective prior-year tallies. The consensus mark for THG’s 2023 earnings has moved up 1.1% in the past seven days.

Shares of Goosehead Insurance and Voya Financial have gained 53.7% and 21.6%, respectively, year to date. However, the Hanover Insurance stock has lost 7.7% in the same time frame.

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Aon plc (AON) : Free Stock Analysis Report

The Hanover Insurance Group, Inc. (THG) : Free Stock Analysis Report

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Goosehead Insurance (GSHD) : Free Stock Analysis Report

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