Chubb Ltd's Dividend Analysis
Understanding the Dividend Prospects of Chubb Ltd
Chubb Ltd (NYSE:CB) recently announced a dividend of $0.86 per share, payable on 2024-01-05, with the ex-dividend date set for 2023-12-14. As investors look forward to this upcoming payment, the spotlight also shines on the company's dividend history, yield, and growth rates. Using the data from GuruFocus, let's look into Chubb Ltd's dividend performance and assess its sustainability.
What Does Chubb Ltd Do?
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ACE acquired Chubb in the first quarter of 2016 and assumed the Chubb name. The combination made the new Chubb one of the largest domestic property and casualty insurers, with operations in 54 countries spanning commercial and personal P&C insurance, reinsurance, and life insurance.
A Glimpse at Chubb Ltd's Dividend History
Chubb Ltd has maintained a consistent dividend payment record since 1993. Dividends are currently distributed on a quarterly basis. Chubb Ltd has increased its dividend each year since 1994. The stock is thus listed as a dividend aristocrat, an honor that is given to companies that have increased their dividend each year for at least the past 29 years. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Chubb Ltd's Dividend Yield and Growth
As of today, Chubb Ltd currently has a 12-month trailing dividend yield of 1.50% and a 12-month forward dividend yield of 1.52%. This suggests an expectation of increased dividend payments over the next 12 months. Chubb Ltd's dividend yield of 1.50% is near a 10-year low and underperforms 83.16% of global competitors in the Insurance industry, suggesting that the company's dividend yield may not be a compelling proposition for income investors.
Over the past three years, Chubb Ltd's annual dividend growth rate was 3.40%. Extended to a five-year horizon, this rate decreased to 3.10% per year. And over the past decade, Chubb Ltd's annual dividends per share growth rate stands at 4.40%. Based on Chubb Ltd's dividend yield and five-year growth rate, the 5-year yield on cost of Chubb Ltd stock as of today is approximately 1.75%.
The Sustainability Question: Payout Ratio and Profitability
To assess the sustainability of the dividend, one needs to evaluate the company's payout ratio. The dividend payout ratio provides insights into the portion of earnings the company distributes as dividends. A lower ratio suggests that the company retains a significant part of its earnings, thereby ensuring the availability of funds for future growth and unexpected downturns. As of 2023-09-30, Chubb Ltd's dividend payout ratio is 0.20.
Chubb Ltd's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Chubb Ltd's profitability 7 out of 10 as of 2023-09-30, suggesting good profitability prospects. The company has reported positive net income for each of year over the past decade, further solidifying its high profitability.
Growth Metrics: The Future Outlook
To ensure the sustainability of dividends, a company must have robust growth metrics. Chubb Ltd's growth rank of 7 out of 10 suggests that the company's growth trajectory is good relative to its competitors.
Revenue is the lifeblood of any company, and Chubb Ltd's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Chubb Ltd's revenue has increased by approximately 10.90% per year on average, a rate that outperforms approximately 74.5% of global competitors.
The company's 3-year EPS growth rate showcases its capability to grow its earnings, a critical component for sustaining dividends in the long run. During the past three years, Chubb Ltd's earnings increased by approximately 9.00% per year on average, a rate that outperforms approximately 61.5% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of 12.20%, which outperforms approximately 72.16% of global competitors.
Next Steps
Considering Chubb Ltd's consistent dividend payments, a growing dividend growth rate, prudent payout ratio, solid profitability, and robust growth metrics, the company presents an interesting case for dividend investors. While the current yield may be lower than some peers, the history of dividend growth and the company's financial strength may compensate for a lower yield in the eyes of long-term investors. Will Chubb Ltd continue its streak of dividend aristocracy, and how will its financial health support future dividend growth? These are questions value investors may ponder as they assess Chubb Ltd as a potential addition to their portfolios.
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This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
This article first appeared on GuruFocus.
