Updated on March 20th, 2024 by Bob Ciura
Only companies in the S&P 500 Index, with at least 25 years of dividend growth, can claim the title of being a Dividend Aristocrat. This club is so exclusive that there are only 68 such companies in the S&P 500 Index.
As a result, Dividend Aristocrats are relatively rare among the broader S&P 500.
With this in mind, we created a list of all 68 Dividend Aristocrats, along with important financial metrics like price-to-earnings ratios and dividend yields.
You can download an Excel spreadsheet with the full list of Dividend Aristocrats by clicking on the link below:
Disclaimer: Sure Dividend is not affiliated with S&P Global in any way. S&P Global owns and maintains The Dividend Aristocrats Index. The information in this article and downloadable spreadsheet is based on Sure Dividend’s own review, summary, and analysis of the S&P 500 Dividend Aristocrats ETF (NOBL) and other sources, and is meant to help individual investors better understand this ETF and the index upon which it is based. None of the information in this article or spreadsheet is official data from S&P Global. Consult S&P Global for official information.
Chubb Ltd. (CB) has increased its dividend for 31 consecutive years. Chubb yields 1.3% right now, which is not a high dividend yield. In fact, it is below the S&P 500 Index’s current dividend yield of 1.5%.
While Chubb is not a high-yield dividend stock, it does provide consistent dividend increases each year, backed by a strong business model.
Business Overview
Chubb is based in Zurich, Switzerland, and provides insurance services, including property & casualty insurance, accident & health insurance, life insurance, and reinsurance.
The company operates in over 50 countries and territories. It is the world’s largest publicly traded P&C insurance company and the largest commercial insurer in the U.S.
Chubb has a large and diversified product portfolio.
Source: Investor Presentation
For its fiscal fourth quarter, Chubb Ltd reported net written premiums of $11.6 billion, which was 13% more than the net written premiums that Chubb generated during the previous year’s quarter. Net written premiums were up 12.5% year-over-year in the company’s Global P&C business unit, while other business units such as Life saw solid growth as well.
Chubb was able to generate net investment income of $1.37 billion during the quarter, or $1.49 billion after adjustments, which was up by a nice 33% compared to the previous year’s period. Chubb generated earnings-per-share of $8.30 during the fourth quarter, which was way above what the analyst community had forecasted.
Chubb’s strong profitability during the quarter can be explained by a good combined ratio, despite some natural disasters that impacted Chubb’s catastrophe losses.
Growth Prospects
Chubb has created significant value for shareholders in terms of growing its book value per share, a key metric for insurance companies. Since 2009 the company’s book value has grown at a compound average growth rate of ~7% per year.
As an insurance company, Chubb has a large pool of accumulated premium income that has not been paid out in claims to customers. This is known as float. Insurers invest premiums as soon as they are collected to earn interest or other income.
Higher interest rates can be a positive catalyst for Chubb’s investment income. Increases in portfolio investment yield will generate more pre-tax net investment income per year.
The company also buys back shares which will help grow earnings. Overall, we estimate Chubb could grow earnings-per-share by 5% annually over the next five years.
Competitive Advantages & Recession Performance
Chubb’s competitive advantages are its leading industry position as well as its financial strength. First, Chubb is the world’s largest publicly traded property and casualty insurance company and the largest commercial insurer in the United States. It has a dominant position across its product categories, which helps it to retain customers.
It is also in a strong financial position. Chubb is rated A by Standard & Poor’s and Aa3 by Moody’s, the major U.S. credit rating agencies. Its healthy balance sheet and high credit rating provide the company with financial strength that helps retain clients and invest for growth.
The insurance industry can be cyclical. As the economic strengths, people tend to have more discretionary capital that can be used to add to their insurance policies. If the economy weakens, customers may pull back on their spending. This occurred during the Great Recession for Chubb.
- 2007 earnings-per-share of $8.07
- 2008 earnings-per-share of $7.72 (-4.3% decrease)
- 2009 earnings-per-share of $8.17 (5.8% increase)
- 2010 earnings-per-share of $7.79 (-4.7% decrease)
- 2011 earnings-per-share of $6.96 (-10.7% decrease)
Although Chubb didn’t see quite as severe profit declines as many other financial firms, earnings-per-share did experience some variability. However, Chubb remained highly profitable during the Great Recession, which allowed it to continue raising its dividend even through the steep economic downturn. Chubb also remained highly profitable in 2021, even during the coronavirus pandemic.
While earnings-per-share may fluctuate from year to year, the company’s book value has increased more consistently.
Valuation & Expected Returns
Using Chubb’s most recent share price of ~$259, along with expected earnings-per-share of $21.70 per share expected for 2024. As a result the stock trades for a P/E of 11.9, which is above our fair value P/E of 9.5.
If shares were to revert to this average value by 2029, investors would see total returns reduced by about -4.4% per year.
Taking the company’s expected EPS growth rate of 5%, dividend yield of 1.3%, and valuation changes collectively leads to total expected returns of 1.9% per year over the next five years.
Thus, valuation headwinds could outweigh most of the returns to be generated from the company’s EPS growth and dividend.
Final Thoughts
While Chubb is a well-managed and diversified insurance stock with a long history of growing book value, we believe the stock will generate low total returns in the coming years.
This is due to the high valuation of the stock when compared to its 10-year average, as well as the low dividend yield as a result of the rising share price. The stability in a cyclical industry is noteworthy, as is the exceptional dividend growth record, but the current valuation makes us lean toward a hold recommendation.
Additionally, the following Sure Dividend databases contain the most reliable dividend growers in our investment universe:
- The Dividend Contenders List: 10-24 consecutive years of dividend increases.
- The Dividend Challengers List: 5-9 consecutive years of dividend increases.
- The Dividend Champions: Dividend stocks with 25+ years of dividend increases, including those that may not qualify as Dividend Aristocrats.
- The Dividend Achievers: dividend stocks with 10+ years of consecutive dividend increases.
- The Dividend Kings: considered to be the ultimate dividend growth stocks, the Dividend Kings list is comprised of stocks with 50+ years of consecutive dividend increases
If you’re looking for stocks with unique dividend characteristics, consider the following Sure Dividend databases:
- The Complete List of Monthly Dividend Stocks: stocks that pay dividends each month, for 12 payments over the year.
- The Blue Chip Stocks List: this database contains stocks that qualify as either Dividend Achievers, Dividend Aristocrats, or Dividend Kings.