Aon Ups Dividend by 43% - Analyst Blog
April 14 2014 - 7:00PM
Zacks
In order to share more profits with shareholders, global risk
management and insurance brokerage provider, Aon
plc (AON) increased its annual dividend by a significant
43%.
In keeping with this annual hike, management declared a quarterly
cash dividend of 25 cents per share, higher than 18 cents paid on
Feb 17, 2014 to shareholders of record as of Feb 3, 2014. The
increased quarterly dividend will be paid on May 15, 2014, to
shareholders of record as of May 1, 2014.
Based on Friday’s closing share price of $79.43, the increased
dividend implies a dividend yield of 1.3%, almost at par with that
of another player in the industry, Brown & Brown
Inc. (BRO).
With this hike, the current annual dividend equates to $1.00 per
share, up from 70 cents paid in 2013. The last dividend hike was
announced in April 2013 when Aon recorded an 11% increase in its
quarterly dividend. If we peek into the company’s history of
dividend hikes, Aon has been paying dividends consistently for a
long time.
After recording almost constant dividends since 2002, the
company initiated a 5% dividend hike in 2012. Since then, the
company has not deferred from increasing it dividends, which have
risen at a two-year CAGR of 29%.
The consistent dividend hikes represent the financial strength and
long-term outlook of the company. Along with dividend payouts, the
company also has a sound share repurchase structure. Aon has ample
liquidity for these payments with operating cash flow, and cash and
cash equivalents at end-2013 being higher than that in 2012 and a
low debt profile. We expect expense and capital management to
continue to boost the operating leverage and earnings in the
upcoming quarters.
Other insurance brokers have been also active in hiking dividends.
Among other industry majors, Marsh & McLennan,
Inc. (MMC) raised its dividend by 8.7% to 25 cents per
share in May 2013 while Erie Indemnity Co. (ERIE)
increased its dividend by 7.2% to 64 cents per share in July
2013.
Aon currently carries a Zacks Rank #3 (Hold). Erie Indemnity and
Marsh & McLennan are among the better-ranked stocks in the
sector that carry a Zacks Rank #2 (Buy).
AON PLC (AON): Free Stock Analysis Report
BROWN & BROWN (BRO): Free Stock Analysis Report
ERIE INDEMNITY (ERIE): Free Stock Analysis Report
MARSH &MCLENNAN (MMC): Free Stock Analysis Report
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