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AXIS Capital to Share More Profits, Hikes Dividend by 2.6%


The board of directors of AXIS Capital Holdings Limited AXS recently approved a 2.6% hike in its quarterly dividend to enhance shareholder value. The company will now pay a dividend of 40 cents per share compared with 39 cents paid on Oct 15.

Shareholders of record as of Dec 31, 2018 will receive the increased dividend on Jan 15, 2019. Based on the closing share price of $54.19 on Dec 6, the raised payout represents a dividend yield of 2.2%, better than its sector’s average of nearly 2%.

AXIS Capital has an impressive track of annual dividend hike. The Zacks Rank #3 (Hold) insurer’s dividend has more than doubled in a decade attributable to its operational efficiency. The company has outpaced expectations in each of the three reported quarters in 2018. The recent hike marks the 14th consecutive dividend increase by the company.

With about 84.1 million shares outstanding at the end of the third quarter, the company has to dish out about $33.6 million quarterly or $100.98 million annually as dividend. This payout is backed by the company’s sturdy capital position. The company’s cash balance as of Sep 30, 2018 was $1.1 billion (up 11.1% over the level at 2017 end.)

Going forward, the company intends to pay back at least 200% of its six months operating earnings to investors through common dividends and share repurchases unless it finds other means of capital deployment.

Other insurers also aim to enhance shareholder value via share buybacks, dividend hikes and special payouts. Last month, the board of directors of Everest Re Group, Ltd. RE approved an 8% hike in its quarterly dividend to $1.40 per share while Assurant, Inc. AIZ approved a 7% hike in its quarterly dividend to 60 cents per share. The board of directors of W.R. Berkley Corporation WRB approved a special dividend of 50 cents in its effort to share more profit with shareholders.

Shares of AXIS Capital have gained 7.8% in a year, outperforming the industry’s increase of nearly 3%.

The insurer’s efforts to improve its portfolio mix and underwriting profitability; fortify the casualty and professional lines in the insurance segment and build on Specialty Insurance, Reinsurance, and Accident and Health for long-term growth should help retain the momentum.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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