Marsh & McLennan Increases Dividend By 9.7%; Stock Gains

The board of directors of Marsh & McLennan Companies, Inc. (NYSE:MMC) on May 19 approved a 9.7% hike in its quarterly dividend to share more profit with investors. The company will now pay a quarterly dividend of 34 cents as against 31 cents paid on May 13, 2016. Shareholders on record as of Jul 1 will receive the higher dividend on Aug 15, 2016.

Following this announcement, shares of the company gained 0.03% in the last trading session.

Based on Marsh & McLennan’s closing share price of $64.20 as of May 20, the increased dividend translates to a yield of 2.1%. Importantly, the insurer has increased its dividend by 7.8% in the last five years and the company’s average dividend yield over the past five years of 2.2% is higher than the yield of 2.1% for the industry.

Marsh & McLennan had last increased its dividend in the second quarter of 2015. That time the issuer had raised the payout by 10.7% to 31 cents.

With about 521 million shares outstanding at the end of the first quarter, the company has to pay about $177 million quarterly or $708.6 million annually as dividend. The company’s robust capital position supports its payout.

Marsh & McLennan has always been committed to enhance its shareholders value via dividend hikes and share buybacks. Apart from sharing its profits through dividend payouts, the company repurchased 3.5 million shares for $200 million in the first quarter of 2016. The insurer with a Zacks Rank #2 (Buy) has a competitive dividend and commitment to long-term shareholder value creation makes it an attractive pick for yield seeking investors.

Some other insurance companies too recently raised their dividend payouts. Chubb Limited (NYSE:CB) approved a 3% hike in its quarterly cash dividend, while The Travelers Companies, Inc. (NYSE:TRV) increased its quarterly dividend by 10%. Also, The United Insurance Health Corp. (NASDAQ:UIHC) raised its payout by 20%.