This global insurance company beat analysts’ EPS estimates by $0.04 last quarter. The shares have a current dividend yield of 1.87%, paid quarterly.
Chubb Limited (CB)
From Directinvesting.com
Chubb Limited (CB) is a global provider of insurance products covering property and casualty, accident and health, reinsurance, and life insurance, and is the world’s largest publicly traded property and casualty insurer. The company provides commercial and personal property and casualty insurance, personal accident and supplemental health insurance, reinsurance and life insurance. The current company arose when ACE Limited acquired Chubb in 2016, and then adopted the Chubb name. Its core operating insurance companies are rated “AA” (Very Strong) for financial strength by Standard & Poor’s and “A++" (Superior) by A. M. Best, with stable outlooks from both agencies.
Its current total market capitalization of $71.2 billion makes CB a large capitalization stock (a large-cap stock has a market capitalization value of more than $10 billion) and its long history of consistent earnings growth and dividend payments makes it a solid company. It is considered a solid and well diversified business with a durable competitive advantage over its rivals, which also enjoys a solid management and corporate culture. According to Yahoo! Finance, consensus estimates call for the company to earn about $10.45 per share this year, up from $9.44 per share in 2018, and to go to about $11.22 per share in 2020. Chubb has paid dividends to investors since 1984, and has increased its payments for twenty consecutive years. During the past five years it has increased its dividends at an average rate of 5.3%, with its quarterly payment of $0.75 currently providing a yield of 1.92%.
A hypothetical investment in Chubb Limited has grown cumulatively (including dividends reinvested) 3,226.94% during the past twenty-five years. The same investment has grown only 1,927.43% during the same period of time, excluding dividends. During the same period, a hypothetical investment in the S&P 500® index (thru the Vanguard 500 Index Admiral (VFIAX) has grown cumulatively (including dividends reinvested) 892.72%. The stock exhibits a healthy Dividend Payout Ratio (DPR is the proportion of earnings paid out as dividends to shareholders) of 35.99%, which means the company is paying out only 35.99% of all its net income in dividends, and is retaining a percentage of earnings to reinvest or grow the business. Its average DPR during the past five years is 35%. Its current Price to Earnings ratio (P/E --a measure of valuation) of 19.1 is 19.3% below the S&P 500® index. The forward P/E ratio is 15.0. Its Price to Sales ratio (P/Sales) of 2.2 is 2.6% below the index. Its Price to Cash Flow of 12.1 is 25.6% below the index, and its Price to Book ratio of 1.3 is 56.0% below the index.
Technically (from the chart’s perspective) CB also looks attractive, while is forming a long base between $120 and $160, in which the $146 level acts as a technical support level (floor). The actively managed no-load mutual funds Vanguard Wellington Inv. (VWELX) and Vanguard Dividend Growth Inv. (VDIGX) are major shareholders of CB, holding 2.4% and 1.3% of its shares respectively. CB’s main competitors are Berkshire Hathaway Inc. (BRK.A) and Transatlantic Holdings Inc. (TRH).
CB’s three-year Beta (a measure of the volatility, or systematic risk in comparison to the market as a whole as evidenced by the S&P 500® Index) is 0.62, so the stock is 38% less volatile than the Market.
CB’s dividend reinvestment plan charges no fees for cash investing, dividend reinvestment, safekeeping, automatic investment or termination of the plan. With the stock being fundamental and technically attractive, this company is an appropriate holding for investors who wish to build a holding over the long term.
Vita Nelson, www.directinvesting.com, 914-925-0022, September 5, 2019