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Chubb (CB) Board Okays Dividend Increase, Share Buyback

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Shares of Chubb Limited CB gained 0.4% in the after-market trading hours as its board of directors approved a 3.75% hike in its dividend and a $2.5 billion share buyback program.

The new annual dividend stands at $3.32 or 83 cents per share quarterly, up from $3.20 or 80 cents per share quarterly paid earlier. The latest rise marks the 29th straight year of dividend increase. Shareholders of record as of Jun 17 will receive the increased quarterly dividend on Jul 8. Based on the closing price of $203.88 as of May 19, the company’s dividend yield is 1.6%, much above the industry average of 0.4%. This makes the stock an attractive pick for yield-seeking investors.

This Zacks Rank #3 (Hold) insurer boasts one of the largest product portfolios in the global insurance industry. CB is focusing on cyber insurance that has immense room for growth, putting in efforts to capitalize on the potential of middle-market businesses, both domestic and international, with a traditional core package as well as a specialty product. Improvement in the pricing environment, new business growth and high renewal rates along with other positives, should help it continue with effective capital deployment.

Chubb has a strong capital position, with sufficient cash generation capabilities. Its underwriting and investment performance provide strong support to the operating cash flow. Riding on a strong capital position, Chubb also buys back shares apart from paying dividends. Concurrent with the dividend hike, the board of directors approved a $2.5 billion share repurchase program, effective through Jun 30, 2022. As of Mar 31, 2022, the company had $1.6 billion under its authorization, available through June 2022.

Shares of Chubb have gained 5.4% year to date, outperforming the industry’s rise of 2.4%. Chubb’s superior underwriting discipline and sound capital structure should help shares trend higher.

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Zacks Investment Research


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Given the solid capital level of the insurance industry and improving operating backdrop favoring strong operational performance, insurers like RLI Corp. RLI, The Travelers Companies, Inc. TRV and Everest Re Group Limited RE have raised dividends to enhance shareholder value.

RLI approved a 4% hike in its quarterly dividend to enhance shareholder value in May 2022. RLI has a dividend yield of 0.8%, better than the industry average of nearly 0.4%.

RLI drives long-term sustainable growth for shareholders with the help of its product portfolio, careful selection of niche markets, distribution partners and customers and the strength of its balance sheet, which in turn enable it to hike dividends regularly.

The Travelers Companies hiked its dividend by 6% in April 2022. TRV has a dividend yield of 2.1%, better than the industry average of 0.3%.

Travelers maintains a conservative balance sheet among its peers. Banking on operational excellence and a solid capital position, the insurer has increased its dividend for the last 11 years.

Everest Re’s board of directors has approved a 6.4% hike in its quarterly dividend. The recent hike highlights its commitment to prudent capital management. This is a testament to Everest Re’s sustained operational performance over a period of time.

Everest Re’s solid financial status provides enough support to engage in shareholder-friendly moves like dividend hikes and share buyback authorization. RE boasts a consistent increase in dividends with the metric witnessing a nine-year CAGR (2014-2022) of 9.2%.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.


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RLI Corp. (RLI) : Free Stock Analysis Report
 
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