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Chubb Limited’s CB board of directors is set to propose a 6.5% hike in its dividend. The insurer will now pay, if approved, an annual dividend of $3.88 or 97 cents per share quarterly. The latest hike would mark the 32nd straight year of dividend increase.
Based on the closing price of $281.69 as of Feb. 27, the company’s dividend yield is 1.3%, much above the industry average of 0.2%. This makes the stock an attractive pick for yield-seeking investors. Historically, Chubb has a solid track record of dividend increase, with the metric witnessing a nine-year (2017-2024) CAGR of 3.1%.
The board also declared a quarterly dividend equal to 91 cents per share. Shareholders of record as of March 14, 2025, will receive the increased dividend on April 4. The dividend will be payable out of legal reserves and will be made in U.S. dollars by the company's transfer agent.
Financial Strength and Capital Management
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 boasts a strong capital position, with sufficient cash generation capabilities. Its solid underlying performance produced strong operating cash flow. Chubb continues to have an exceptionally strong capital position and a conservative level of leverage, reflecting strong liquidity. Operating cash flow and adjusted operating cash flow were $16.18 billion and $15.90 billion, respectively, in 2024. Riding on a strong capital position, the company also buys back shares apart from paying dividends.
In 2024, CB repurchased $2.0 billion of shares in a series of open market transactions under the board share repurchase authorizations. For the period Jan. 1, 2025, through Feb. 26, 2025, CB repurchased shares for a total of $148 million in a series of open market transactions under the share repurchase program authorization. As of Feb. 26, 2025, $1.5 billion remained in its share repurchase authorization.
Chubb’s return on equity — a profitability measure of how prudently the company is utilizing its shareholders’ funds — stands at 13.7%, higher than the industry’s average of 7.6%. Its return on equity has been increasing steadily over the last few years.