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Marsh & McLennan (MMC) Boosts Share Buyback Program by $5B

·3 min read

Marsh & McLennan Companies, Inc. MMC recently announced rewards for shareholders in the form of additional share buyback authorization and dividends. The enhancement of the repurchase program is in line with its commitment to boost shareholder value.

Marsh & McLennan’s board of directors authorized an additional share buyback plan of $5 billion. The company’s existing buyback program had $1.3 billion left at 2021 end with no time limit. With the new authorization, the repurchase fund value jumps to almost $6.3 billion, excluding any buyback action held this year so far.

Last year, MMC bought back 7.9 million shares for a total of $1.2 billion, marking the highest level of share buybacks since 2015. This year, the company has plans to deploy roughly $4 billion capital on dividends, buyouts and share buybacks. However, the company prefers boosting its portfolio through acquisitions to share buybacks. It has sufficient capital in place to do both as mentioned below.

Marsh & McLennan also announced a quarterly dividend of 53.5 cents per share, in line with the previous figure. It will be paid out on May 13, 2022 to shareholders of record as of Apr 6. The company’s dividend yield of 1.3% remains higher than the industry average of 1.1%. Last July, the company’s board of directors hiked its quarterly cash dividend by 15%, reflecting the 12th consecutive year of dividend increase history.

Marsh & McLennan’s shareholder value-boosting efforts are supported by strong cash-generating abilities. Last year, it generated net operating cash flow of $3,516 million. Its free cash flow of $3,110 million in the trailing 12 months jumped 2.3% year over year. The company also ended last year with $1.8 billion cash and cash equivalents. MMC’s strong operations, driven by its diverse product offerings, a wide geographic footprint and strong client retention, will likely keep aiding its efforts to enhance shareholder value.

Price Performance

Marsh & McLennan has rallied 37.7% in the past year compared with the industry’s 22.1% rise.

Zacks Investment Research
Zacks Investment Research


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Zacks Rank & Key Picks

Marsh & McLennan currently has a Zacks Rank #3 (Hold). Some better-ranked stocks from the finance space include Cincinnati Financial Corporation CINF, First American Financial Corporation FAF and Berkshire Hathaway Inc. (BRK.B), each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Based in Fairfield, OH, Cincinnati Financial’s consistent cash flow and sufficient cash balance continue to boost liquidity. The Zacks Consensus Estimate for Cincinnati Financial’s first-quarter 2022 bottom line indicates an 8% year-over-year rise. CINF beat earnings estimates in each of the last four quarters, with an average of 38.5%.

First American Financial has been generating improving revenues over the years due to growing direct premiums and escrow fees and title agent premiums. The Zacks Consensus Estimate for First American Financial’s 2022 bottom line has improved 2.2% in the past 30 days. FAF beat earnings estimates in each of the last four quarters, with an average of 29.4%.

Berkshire Hathaway is expected to benefit from disciplined capital management and acquisitions. The Zacks Consensus Estimate for Berkshire Hathaway’s bottom line for 2022 indicates a 6.1% year-over-year rise. Headquartered in Omaha, NE, BRK.B beat earnings estimates thrice in the last four quarters and missed the same once, with an average surprise of 11.9%.


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