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Dividends can be underrated but they form a large part of investment returns, playing an important role in compounding returns in the long run. Over the past 10 years, Chubb Limited (NYSE:CB) has returned an average of 2.00% per year to shareholders in terms of dividend yield. Let’s dig deeper into whether Chubb should have a place in your portfolio. See our latest analysis for Chubb
Here’s how I find good dividend stocks
If you are a dividend investor, you should always assess these five key metrics:
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Is its annual yield among the top 25% of dividend-paying companies?
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Does it consistently pay out dividends without missing a payment of significantly cutting payout?
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Has dividend per share risen in the past couple of years?
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Is its earnings sufficient to payout dividend at the current rate?
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Will the company be able to keep paying dividend based on the future earnings growth?
How well does Chubb fit our criteria?
Chubb has a trailing twelve-month payout ratio of 34.40%, meaning the dividend is sufficiently covered by earnings. In the near future, analysts are predicting lower payout ratio of 27.04%, leading to a dividend yield of 2.25%. However, EPS should increase to $10.29, meaning that the lower payout ratio does not necessarily implicate a lower dividend payment. If dividend is a key criteria in your investment consideration, then you need to make sure the dividend stock you’re eyeing out is reliable in its payments. Whilst its per-share payments have increased during the past 10 years, there has been some hiccups. Investors have seen reductions in the dividend per share in the past, although, it has picked up again. Relative to peers, Chubb generates a yield of 2.09%, which is on the low-side for Insurance stocks.
Next Steps:
With this in mind, I definitely rank Chubb as a strong dividend stock, and makes it worth further research for anyone who likes steady income generation from their portfolio. Given that this is purely a dividend analysis, I recommend taking sufficient time to understand its core business and determine whether the company and its investment properties suit your overall goals. Below, I’ve compiled three relevant aspects you should further examine:
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Future Outlook: What are well-informed industry analysts predicting for CB’s future growth? Take a look at our free research report of analyst consensus for CB’s outlook.
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Valuation: What is CB worth today? Even if the stock is a cash cow, it’s not worth an infinite price. The intrinsic value infographic in our free research report helps visualize whether CB is currently mispriced by the market.
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Other Dividend Rockstars: Are there better dividend payers with stronger fundamentals out there? Check out our free list of these great stocks here.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.