AXIS Capital Holdings Ltd. (AXS) has always focused on enhancing its shareholders’ value, be it through sharing more profit via dividend hikes or lowering share count. In this regard, the board of directors recently approved a 7.4% hike in quarterly dividend as well as a $750 million share buyback.
The new dividend of 29 cents is up from 27 cents paid in Oct 15, 2014. It will be paid on Jan 15, 2015 to shareholders of record on Dec 31, 2014.
AXIS Capital has paid regular quarterly dividends and increased dividend each year. The current dividend hike marks the eleventh straight year of increase. Based on Friday’s closing price of $50.45, AXIS Capital’s dividend yield is 2.30%. Its earlier dividend hike had been effectuated in Dec 2013, after the board approved an 8% increase.
The board also approved a buyback program, authorizing AXIS Capital to repurchase shares worth $750 million through Dec 31, 2014. The current program replaces the earlier one that has $268 million remaining through the same date. The company has spent $482 million to buy back 10.5 million shares thus far in 2014, bringing the tally to 92 million shares repurchased for $3.2 billion over the last 11 years.
The dividend hike and new authorization by AXIS Capital duly reflects its sound financial position which is supported by strong operational performance. Cash and cash equivalents increased nearly 44% from 2013 end to $1.29 billion at third-quarter end. Retained earnings also stood solid at $5.6 billion, up 10%.
The company has returned about $556 million till the third quarter to its shareholders in the form of dividends and buybacks representing 126% of year-to-date operating income. AXIS Capital still envisions returning about 100% of its annual operating earnings to shareholders through dividends and share buybacks.
The Zacks Consensus Estimate has been rising upward since the company reported solid third-quarter earnings with a 6.7% surprise. With the fresh dividend hike and new repurchase program, we expect analysts to revise estimates upward and in turn impact the Zacks Rank positively. The stock presently carries a Zacks Rank #3 (Hold).
Several insurers are treading the same path to boost their shareholders’ value. Recently, the board of directors of The Hanover Insurance Group, Inc. (THG) approved an 11% dividend hike while Erie Indemnity Co. (ERIE) approved a 7.2% dividend hike on both Class A and Class B shares. Last month, the board of directors of Everest Re Group Ltd. (RE) approved a 27% increase in dividend.
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