Prudential Financial (PRU) has been very consistent with dividend payouts to shareholders, which makes the stock a very strong prospect for long-term value investors. The company has returned approximately $10 billion since 2010 to shareholders in the form of dividends and buybacks. This is beyond the capital it deployed to support organic growth in mergers and acquisitions.
Over the past five years, the dividend has grown by an annualized rate nearing 20%. In 1Q16, there was significant capital deployment to about $0.7 billion of shareholder distributions.
The company declared a quarterly dividend of $0.70 per share, a rise of 21% compared to the previous quarter, translating to an annualized dividend yield of 4% based on current prices.
The company’s dividend yield has remained at par with other players in the insurance business, which forms 20.6% of the iShares MSCI ACWI ETF (ACWI). The distributions formed 2.2% of the company’s total market capitalization of $31.4 billion.
Boosting repurchase plans
Prudential Financial increased its share repurchase program earlier this year from $1 billion to $1.5 billion, reflecting that the management is putting shareholder interests first and is confident in its current valuation and long-term prospects.
In 1Q16, the company acquired 5.4 million shares of its common stock at the total cost of $375 million for an average price of $69.38 per share.
From the beginning of repurchases in July 2011 through March 31, 2016, the company has acquired 70.4 million shares of its common stock at a total cost of $4.8 billion for an average price of $67.79 per share.
Other insurers are also returning capital to shareholders by repurchasing their shares. For example, Metlife (MET) continued to repurchase its shares in 2016, ACE (ACE) repurchased $430 million in shares, and Allstate (ALL) made a share repurchase of ~$250 million.