MetLife, Inc.’s (NYSE:MET) board of directors has approved a new buyback authorization of common shares worth $1.5 billion. The recent announcement is in tandem with the company’s goal of returning $5 billion in capital to its shareholders in 2018.
Last year, the company had announced a $2 billion repurchase under which it has bought back nearly $1.63 billion worth shares.
Shares worth around $370 million still remains under its 2017 authorization. Continuous buybacks lowers share count, thus providing additional boost to the company’s bottom-line.
MetLife has a disciplined capital management policy in place backed by a strong risk-based capital position, sufficient liquidity and a low-debt ratio. Apart from regular repurchases, the company has hiked its dividend regularly since 2013. With the recent increase of 5%, dividend has grown at a five-year CAGR of 17.8%. Its dividend yield of 3.5% betters the industry average of 1.9%.
Also a solid Return on Equity (ROE) reinforces its growth potential. The Zacks Rank #3 (Hold) multiline insurer’s ROE of 7.9% betters the industry average of 5.8% for the industry, reflecting its tactical efficiency in using shareholder funds.
Shares of the company have lost 4.06% which compares unfavorably with the industry's gain of 2.44% in the past year. Nonetheless, sales growth in Asia and EMEA, rise in operating premiums, fees and other revenues in its Group Benefits segment and an increase in net investment income along with focus on exiting high risk businesses and a disciplined capital management is likely to help the stock rebound.
Share repurchase and dividend hike seem to be a well-accepted strategy by companies to instill investors’ confidence in the stock. Recently, the board of directors of CNO Financial Group, Inc. (NYSE:CNO) has increased their quarterly dividend by 11%, while the dividends of Chubb Corporation (NYSE:CB) and United Fire Group Inc. (NASDAQ:UFCS) were hiked by 3% and 10.7% respectively.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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MetLife, Inc. (MET): Free Stock Analysis Report
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Chubb Limited (CB): Free Stock Analysis Report
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