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 ~$10 billion to shareholders in the form of dividends and buybacks since 2010. This is beyond the capital it deployed to support organic growth in mergers and acquisitions.
Over the past five years, the company’s dividend has grown by an annualized rate of near 20%. In 2Q16, there was capital deployment to about $0.7 billion of shareholder distributions. The company declared a quarterly dividend of $0.70 per share, in line with the previous quarter, translating to an annualized dividend yield of 3.7% based on current prices.
The company’s dividend yield has remained at par with the yields of other players in the insurance business, which form 20.6% of the iShares MSCI ACWI ETF (ACWI). The distributions formed 2.2% of the company’s total market capitalization of $34 billion.
Boosting repurchase plans
Prudential Financial increased its share repurchase program from $1 billion to $1.5 billion earlier this year, reflecting that the management is putting shareholder interests first and is confident in its current valuation and long-term prospects. 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.
In 2Q16, the company acquired 5.0 million shares of its common stock for a total cost of $375 million—an average price of $75.38 per share.
From the beginning of repurchases in July 2011 through June 30, 2016, the company acquired 75.4 million shares of its common stock at a total cost of $5.1 billion—an average price of $68.29 per share.