IB Net Payout Yields Model

Net Payout Yields Focus: Chubb

Chubb (CB) is a recent addition to the Net Payout Yields portfolio and provides one of the highest yields in the market these days. CB falls into the property and casualty insurance sector that continues to remain undervalued due to fears in the sector. With a PE of just 10, the stock remains cheap.

Yesterday, CB announced the continuation of its dividend plus the a new share repurchase program of up to 30 million shares or roughly 10% of the outstanding shares.

To this model, this provides the best of both worlds. First, investors get a solid 2.5% dividend providing a nice income stream and a solid return. Second, the huge stock repurchase provides a constant floor for the stock and the opportunity for a dramatic increase in earnings per share just from reducing the outstanding shares.

It remains perplexing that such stocks remain this low with such support from the company. Regardless, the Net Payout Yields portfolio will happily take advantage fo



  • declared a regular quarterly dividend in the amount of $0.37per share payable January 11, 2011 to shareholders of record onDecember 23, 2010.  
  • The Board also authorized a new share repurchase program of up to 30 million shares of the Corporation's common stock.  Purchases may be made from time to time in the open market or in privately negotiated transactions.  The program has no expiration date.  The Corporation's existing repurchase program is expected to be completed prior to the end of the year.  
  • "Today's actions reflect the Board's continued confidence in Chubb's strong financial condition as well as an ongoing commitment to the importance of our capital management strategy," said John D. Finnegan, Chairman, President and Chief Executive Officer.  


Disclosure: Long CB

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