Higher payouts

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.

Prudential Returns $700 Million in Payouts to Shareholders

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.

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