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Chubb Limited (CB) to Share More Profits, Ups Dividend by 5.8%

Chubb Limited’s CB board of directors approved a 5.8% hike in its dividend. The insurer will now pay an annual dividend of $3.64 or 91 cents per share quarterly. The latest hike marks the 31st straight year of dividend increase.

Shareholders of record as of Jun 14 will receive the increased quarterly dividend on Jul 5. Based on the closing price of $264.88 as of May 16, the company’s dividend yield is 1.3%, which is much above the industry average of 0.2%. This makes the stock an attractive pick for yield-seeking investors.

This property and casualty insurer is 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. Better pricing, business growth and high renewal rates, along with other positives, should help it continue its effective capital deployment.

Chubb Limited has a strong capital position with sufficient cash-generation capabilities. Its solid underlying performance provides strong support to operating cash flow. Riding on a strong capital position, the company also buys back shares apart from paying dividends.

For the three months ended Mar 31, 2024, this Zacks Rank #3 (Hold) insurer repurchased shares for $316 million in a series of open market transactions under the board’s share repurchase authorization. For the period Apr 1, 2024, through Apr 25, 2024, CB repurchased shares for $62 million in a series of open market transactions under the share repurchase authorization. As of Apr 25, 2024, $3.3 billion remained in its share repurchase authorization. Also, the insurer’s return on equity, a profitability measure of how prudently the company is utilizing its shareholders’ funds, is 16.2%, which is higher than the industry’s average of 7.8%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Shares of Chubb Limited have gained 32.1% over the past year compared with the industry’s growth of 24.2%. CB’s superior underwriting discipline and sound capital structure should help shares bounce back.

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Zacks Investment Research

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Given the solid capital level of the insurance industry and an improving operating backdrop favoring strong operational performance, insurers like The Travelers Companies, Inc. TRV, RLI Corp. RLI and AXIS Capital Holdings Limited AXS have resorted to effective capital deployment to enhance shareholders' value.

TRV approved a 5% hike in its quarterly dividend in the first quarter of 2024 to enhance shareholder value. This marked the 20th consecutive year of dividend increases with a compound annual growth rate of 8% over that period. Its dividend yield of 1.8% is better than the industry average. The insurer maintains a conservative balance sheet among its peers. It aims to generate increased earnings and capital in excess of growth needs and maintain a balanced approach to rightsizing capital and growing book value per share over time as part of its long-term financial strategy.

RLI approved a 7.4% hike in its quarterly dividend to enhance shareholder value. RLI Corp.’s dividend yield of 0.7% is better than the industry average. It has increased dividends in each of the last 49 years. The insurer 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.

AXIS Capital’s board has approved a new share repurchase program that authorizes the insurer to purchase up to an aggregate of $300 million of shares. This new repurchase authorization is incremental to the company’s previously announced $100 million share repurchase program, which has $36 million available for repurchases. The new share repurchase program is expected to bring the total amount for future repurchases available to $336 million. AXIS Capital continues to boost shareholder value through stock buybacks and dividend hikes.


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