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Chubb to Propose 2.7% Dividend Hike, Share More Profits

Zacks Equity Research

The board of directors of Chubb Limited CB has announced that it will propose a 2.7% increase in annual dividend at the company’s annual general meeting. If approved, this will be the 26th straight year of dividend hikes. Following the announcement, shares gained 0.7% in the last trading session.

If approved, Chubb will pay a quarterly dividend of 75 cents ($3.00 on an annualized basis) compared with 73 cents ($2.92 on an annualized basis) paid currently.

Chubb has 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. The company beat estimates for 10 straight quarters. Based on the closing price of $133.90 as of Feb 28, the company’s dividend yield is 2.2%, much above the industry average of 1.4%.

Concurrently, the board members also announced a quarterly dividend of 31 cents per share to shareholders of record as of Mar 22, 2019 to be paid on Apr 12, 2019.

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 $1.5 billion share buyback program under its authorization.

Shares of Chubb have however underperformed the S&P 500 Index year to date. While the stock has gained 3.7%, the index has rallied 11.1%. The company’s expanded capabilities, strategic growth initiatives and effective capital deployment should help the stock rally.

Several insurers have hiked dividend to reward their shareholders lately. The board of Assured Guaranty Ltd AGO approved a 12.5% increase in quarterly dividend, while FBL Financial Group, Inc. FFG raised dividend by 4.3%.

A Stock to Consider

A better-ranked property and casualty insurer is Cincinnati Financial Corp. CINF sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Cincinnati Financial provides property and casualty insurance products in the United States. The company pulled off positive surprise in three of the trailing four quarters, with the average earnings surprise being 18.08%.

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FBL Financial Group, Inc. (FFG) : Free Stock Analysis Report
Assured Guaranty Ltd. (AGO) : Free Stock Analysis Report
Chubb Limited (CB) : Free Stock Analysis Report
Cincinnati Financial Corporation (CINF) : Free Stock Analysis Report
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