Aegon N.V. Boosts Annual Dividend Five Times in Six Years (AEG)
By: Ned Piplovic,
Aegon N.V., a Dutch life insurance provider, has rewarded its shareholders with a fifth boost of the company’s annual dividend in the past six years.
In addition to the near-perfect record of dividend hikes in the past six years, the company also hiked its annual dividend 14 times in the past 17 years. AEG allows its shareholders to choose whether they wish to receive their dividend distributions as a cash distribution or as a stock dividend.
For the 2017 year-end dividend distributed in 2018, 42% of the shareholders elected to receive a stock dividend. These shareholders will receive one additional common share for every 39 common shares of the company’s stock that they already own. The company used the share price’s high and low of each of the five trading days from June 11 through the closing on June 15, 2018, as quoted on the Euronext Amsterdam exchange to determine the average share price. For this year, the average share price was $6.18 (€ 5.4174).
To counteract the dilutive effect of the stock dividend, Aegon N.V. committed to repurchase nearly 22 million shares between July 2 and August 10, 2018. The shares were set to be repurchased at “a maximum of the average of the daily volume-weighted average prices during the repurchase period.”
The company completed its repurchase program of 21,954,140 common shares by the anticipated end date at an average share price of $6.09 (€ 5.34) and the company will hold the shares as treasury shares to use for covering future stock dividends.
In addition to its rising annual dividend distributions, the company’s share price finally recovered from a 60%-plus decline between the beginning of 2014 through mid-2016 to reward shareholders with positive returns over the past 12 months.
Based on Aegon’s dividend distribution timeline over the past few years, the company should distribute another round of dividends in early September to all its shareholders of record as of a yet-to-be-announced mid-August 2018 ex-dividend date.
Aegon N.V. (NYSE:AEG)
Founded in 1983 and headquartered in The Hague, Netherlands, Aegon N.V. provides life insurance, pensions and asset management services. The company offers life and protection products, as well as employer, endowment and term life insurance products. Additionally, the company also provides supplemental health, accidental death and dismemberment insurance, critical illness, cancer treatment, income protection, travel and long-term care insurance products. The company also provides annuities, retirement plans and mutual funds, as well as employer-sponsored pensions, mortgages and banking products. Furthermore, AEG offers other general insurance products, such as automotive, liability, disability, household insurance and fire protection, as well as financing and reinsurance services.
The company pays its dividend using an unconventional schedule. While paying two annual dividend distributions is not that unusual, the company pays its two installments in consecutive quarters instead of the more conventional way of distributing the payments six months apart. In 2018, the current $0.33 annualized payout corresponds to a 5.4% yield, which outpaced the company’s own 4.8% average dividend yield over the past five years by more than 12%.
Furthermore, Aegon’s current 5.4% yield outperformed the 3% average yield of the entire Financials sector by almost 80%. The comparison to the company’s peers in the Life Insurance industry segment is even more favorable. As the highest-yielding security in the entire segment, Aegon’s current yield is nearly triple the 1.87% average yield of all the companies in the segment and more than 130% above the 2.28% simple average yield of the segment’s only dividend paying companies. Over the past three years of consecutive annual dividend hikes, the company has enhanced its total annual payout amount 23%, which is equivalent to a 7.2% average annual growth rate.
After a decline of nearly 7% at the beginning of the trailing 12 months, the share price bottomed out at its 52-week low of $5.52 on October 5, 2017, before reversing the decline into a 6-month-long uptrend. At the end of that uptrend, the share price peaked on April 23, 2018, at $7.41 and gave back some of the gains to close on August 13, 2018, at $ 6.13. This closing price was 3.4% higher than one year earlier and more than 11% above the 52-week low from early October 2017. The small share price gain and the annual dividend distribution combined to offer Aegon’s shareholders a total return of nearly 6% over the last 12 months, which is a good indication of recovery over the 4% and 11% total losses over the past five and three years, respectively.
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