Aon Plc (AON) Rewards Investors With 9% Increase In Dividend

In a bid to return more value to shareholders, the board of directors of Aon plc (NYSE:AON) recently approved a 9% hike in its annual dividend. Previously, Aon approved a 10% dividend hike on Apr 15, 2016..

The insurance broker’s has a solid track record of increasing dividend each year since 1999, backed by its operating strength. The recent one marks the 18^th consecutive year of dividend hikes by the company. Aon has grown its dividend at a five-year CAGR (2012–2017) of nearly 18%.

The company will now reward investors with a dividend of 36 cents per share as against 33 cents paid on Feb 1, 2017. Shareholders on record as of May 1, 2017, will have the meatier dividend in their pockets on May 15, 2017. Based on the closing share price of $118.10 as of Apr 13, the increased payout translates to a dividend yield of 1.12%. Aon presently has a dividend payout ratio of 24.71%, which is above the
industry average of 14.85%.

The company’s relentless efforts to enhance shareholders’ value has helped its shares outperform on a year to date, the stock has gained 5.9% outpacing the 4.4% increase registered by the Zacks Insurance Brokerage industry.

Dividend hikes and share buybacks not only testify to the operational and financial strength of a company, but also make a stock attractive for yield-seeking investors. Aon’s consistent dividend payments have been largely supported by its solid cash position. Backed by higher cash flows, the company announced an 11% hike in its regular dividends in Apr 2013, a 43% increase in Apr 2014 and 20% raise in Apr 2015, before the 10% hike in 2016.

Zacks Rank and Stocks to Consider

Aon carries a Zacks Rank #4 (Sell).

Some better-ranked stocks from the insurance space are James River Group Holdings, Ltd. (NASDAQ:JRVR) , MGIC Investment Corporation (NYSE:MTG) and Cincinnati Financial. (NASDAQ:CINF) . Each of these stocks holds a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

James River Group offers specialty insurance and reinsurance services in the U.S. The company delivered positive surprises in three of the last four quarters with an average beat of 3.60%.

MGIC Investment provides private mortgage insurance and ancillary services to lenders and government sponsored entities in the U.S. The company delivered positive surprises in three of the last four quarters with an average beat of 21.74%.

Cincinnati Financial deals in the property casualty insurance business in the U.S. The company delivered positive surprises in all of the last four quarters with an average beat of 9.17%.

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