Dividend Growth Stock Overview: Chubb Limited

Photo: Flickr.com/Alan Cleaver

Note: ACE Limited recently purchased The Chubb Corporation and changed its name to Chubb Limited.  The company trades under the ticker symbol CB.  This article has been updated to reflect the acquisition.

About Chubb Limited

Chubb Limited is a Zurich-based holding company whose subsidiaries provide insurance and reinsurance services across 54 countries. In addition to covering the traditional insurance lines of home and automobile insurance, the company also covers niche markets like aviation and energy, and provides liability insurance to high-net-worth individuals and families. Chubb Limited was formed when ACE Limited purchased S&P 500 Dividend Aristocrat The Chubb Corporation in January 2016, and began trading under the latter’s ticker symbol CB. The newly merged company, which is the world’s largest publicly traded property and casualty insurer, operates in 54 countries and employs over 30,000 people.

Chubb generates more than half of its net premiums from commercial property and casualty insurance and reinsurance contracts, with another 20% each from personal insurance contracts, and accident and health contracts.

Nearly two-thirds of the insurance premiums come from within the United States, 15% from Europe, Eurasia and Africa, and roughly 10% from Asia.

The company is a member of the S&P 500 index and trades under the ticker symbol CB.

Chubb Limited’s Dividend and Stock Split History

Chubb Dividends

Chubb Limited has compounded dividends at nearly 15% over the last 5 years.

Chubb Limited has increased its dividend payout year-over-year since coming public in 1993. The company has an irregular pattern of announcing dividend increases, but generally does so every 2 to 4 quarters. Over the last three years, dividend increases were announced in the 2nd quarter of 2012, the 2nd quarter of 2013, the 4th quarter of 2013, the 2nd quarter of 2014, and the 2nd quarter of 2015. At the most recent dividend increase announcement, in May 2016, the company announced that it would pay the annual dividend in four quarterly installments. Hence, I estimate that Chubb Limited will announce its next increase in May 2017, with the stock going ex-dividend at the end of June 2017.

Chubb’s most recent dividend increase of 3.0% to an annualized rate of $2.76 was unusually small for the company. In general, annual dividend increases have ranged from the high single digit percentages to increases in excess of 20%. Chubb has compounded dividends over the last 5 years at a rate of 14.87%, making Chubb one of the few companies that have doubled its dividend over the last 5 years. Over the last 10 and 20 years, the company’s dividend growth rates are 10.91% and 13.66%, respectively.

With regards to stock splits, Chubb Limited has only split its stock once – a 3-for-1 split in March 1998 as ACE Limited.

Over the 5 years ending on December 31, 2015, Chubb Limited stock appreciated at an annualized rate of 16.02%, from a split-adjusted $55.28 to $116.19. This significantly outperformed the 10.20% annualized return of the S&P 500 during this time.

Chubb Limited’s Direct Purchase and Dividend Reinvestment Plans

Chubb Limited has both direct purchase and dividend reinvestment plans. You will need to be a current shareholder to participate in the plans, which means that if you own shares through your broker, you’ll need to have them transferred into your name. Once enrolled, the minimum investment amount for the direct purchase plan is $25 per transaction, up to $3000 per month.

The fee structure of the plans is favorable to investors. There is no setup fee to join the plan and Chubb covers all costs associated with share purchases. The only fees associated with the plan are when you sell your shares. When you do, you’ll pay a transaction fee of between $15 and $25 (depending on the type of sell order) and a commission of 12 cents per share.

Helpful Links

Chubb Limited’s Investor Relations Website

Current quote and financial summary for Chubb Limited (finviz.com)

Information on the direct purchase and dividend reinvestment plans for Chubb Limited

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