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Chubb: 25-Year Dividend Hike Streak Merits 'Aristocrat'

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Piotr Trojanowski | Dreamstime.com

By Tuesday, 29 January 2019 06:52 PM Current | Bio | Archive

Every year, S&P Dow Jones Indices updates its list of Dividend Aristocrats, a group of stocks in the S&P 500 with 25+ consecutive years of dividend growth. On January 24, four companies were added to the list. There are now 57 Dividend Aristocrats.

One of the four additions for 2019 is insurance giant Chubb Ltd. (CB). Chubb has now increased its dividend for 25 consecutive years, qualifying it as a new Dividend Aristocrat. In addition to its consistent dividend growth, Chubb is also an attractive stock because of its international growth exposure.

Business Overview

Chubb Ltd is a global provider of insurance and reinsurance services. It is a global leader, headquartered in Switzerland with operations in more than 50 countries and territories. Chubb provides insurance services including property & casualty insurance, accident & health insurance, life insurance, and reinsurance.

Chubb continued its strong performance in the most recent quarter. For the quarter, Chubb’s core operating income excluding catastrophic losses—an important measure of profitability—increased by 2.9% versus the same quarter a year ago. Chubb’s book value per share grew 0.4% while its combined ratio in the quarter was 90.9%, showing very profitable underwriting activity. International growth was a bright spot for Chubb. Net premiums written increased 6% last quarter for Chubb’s overseas General Insurance business.

Going forward, Chubb has a long runway of growth up ahead. It will benefit from writing new policies, raising prices, and rising investment income as well. Net premiums written increased 4.6% over the first nine months of 2018. Higher interest rates will also help Chubb grow its income. Chubb had an investment portfolio of $101 billion at the end of the third quarter, invested primarily in fixed income securities. Rising interest rates will result in higher yields from these investments.

Chubb generates a lot of cash from its multiple revenue sources, which enables it to return lots of cash to shareholders each year.

Chubb: One Of The Newest Dividend Aristocrats

Chubb is a dividend growth stock. It has now increased its dividend for 25 years in a row, including a 3% hike in 2018. The stock has a current yield of 1.5% after accounting for dividend withholding taxes. Chubb also authorized a $1.5 billion share repurchase for 2019, representing more than 2% of the company’s current market capitalization. This results in a total shareholder yield of over 4% for 2019, combining dividends and share repurchases.

Chubb should be able to maintain its position on the Dividend Aristocrats list over the next several years. Chubb is the world’s largest publicly traded property and casualty insurance company, and the largest commercial insurer in the United States. The company has multiple catalysts for long-term growth, which should result in continued dividend increases each year.

Ben Reynolds is CEO of Sure Dividend. Sure Dividend helps individual investors build high quality dividend growth stock portfolios for the long run.

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One of the four additions for 2019 is insurance giant Chubb Ltd. (CB). Chubb has now increased its dividend for 25 consecutive years, qualifying it as a new Dividend Aristocrat.
chubb, dividend, aristocrats
Tuesday, 29 January 2019 06:52 PM
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