The shareholders of ACE Limited (ACE), at the extraordinary general meeting held on January 9, 2012 approved the board’s proposal to boost quarterly dividend to 47 cents. The increased dividend represents a substantial hike of 34% from 35 cents paid earlier.
The first increased dividend will be paid on January 31, 2012 to shareholders of record as on January 10, 2012.
On an annualized basis, ACE Limited will now pay a dividend of $1.88 per share, up from $1.40. Previously, in February 2011, the board, announced a 6.5% increase in the quarterly dividend to 35 cents ($1.40 on an annualized basis), up from 33 cents ($1.32 on an annualized basis).
ACE has had a consistent track record of paying quarterly dividends and the current dividend is not an exception to the case. The company also has a record of increasing its dividend each year. Its dividend yield is 2.68%.
ACE appears to have a strong capital and liquidity position, helping it increase the quarterly dividend. The cash balance of ACE Limited at third quarter-end totaled $766 million, up 57% from the year ago level. Year to date, cash from operation also increased 8% to total approximately $3 billion.
The stock market also reacted positively to the news, with the share price increasing 0.46% to close at $70.35 as on Monday.
The results of ACE Limited were not affected despite natural disasters that led to catastrophe losses. The company is well poised on the strength of its international presence, diversified product offering, risk management, conservative underwriting practice and strong reserves. ACE Limited remains focused on enhancing its earnings, return on equity and book value per share.
ACE Limited expects to deliver 2011 operating earnings in a band of $6.55 – $6.75 per share, raised from earlier expectation of $6.00 – $6.20 per share. The Zacks Consensus Estimate for 2011 is $6.92, above the company guidance. The company is scheduled to announce its fourth quarter results after the market closes on January 31, 2012.
We maintain our long-term “Neutral” recommendation on ACE Limited. The quantitative Zacks #3 Rank (short-term Hold rating) for the company indicates no clear directional pressure on the stock over the near term.
Headquartered in Zurich, Switzerland, ACE Limited, through its subsidiaries, provides a range of insurance and reinsurance products to commercial and individual customers worldwide. The company competes with American International Group Inc. (AIG) and The Travelers Companies Inc. (TRV).
ACE LIMITED (ACE): Free Stock Analysis Report
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