Marsh & McLennan Offers Shareholders 10.7% Dividend Hike (MMC)
By: Ned Piplovic,
Marsh & McLennan Companies, Inc. (NYSE: MMC) is slated to boost its dividend payout almost 11% in the upcoming quarterly distribution. This quarterly payout will be the company’s ninth consecutive annual dividend increase and the 11th dividend hike in the past 12 years. Over the past nine consecutive years, the company has doubled its annual dividend payout amount.
In the past 12 months, the company’s stock price experienced more volatility than it did in the past five years, but it still managed to increase over that time. More price appreciation in the future is definitely possible as the company’s current closing price is more than 12% below the analysts’ average price target.
The ex-dividend date of July 10, 2018 is approaching quickly, so investors interested in the higher dividend payments and the potential for significant share price appreciation should waste no time with their due diligence. All shareholders of record prior to the above ex-dividend date will receive the upcoming distribution on August 15, 2018.
Marsh & McLennan Companies, Inc. (NYSE:MMC)
Headquartered in New York and founded in 1871, Marsh & McLennan Companies, Inc. is a professional services firm that provides advice and solutions worldwide. The company operates in two segments — Consulting and Risk & Insurance Services. The Risk and Insurance Services segment offers risk management, insurance, reinsurance brokering, financial modeling and related advisory services. The Consulting segment provides health, retirement, talent and investments consulting services and products. This segment also specializes in management, economic and brand consulting services. Through its four operating companies — Marsh, Oliver Wyman, Guy Carpenter and Mercer — MMC offers its services in more than 75 countries around the world.
Just last week, Marsh & McLennan announced the acquisition of the Houston-based Wortham Insurance, the St. Paul, Minnesota-based Klein Agency, Inc. and the Rockville, Maryland-based Insurance Associates. The company will hold a conference call on July 26, 2018, to discuss its second quarter financial results.
The share price passed through its 52-week low of $76.88 on August 24,2018 on its way to a total gain of 10.2% before reaching the 52-week high of $85.97 on December 4, 2017. After peaking in early December 2017, the share price bounced of the $86 resistance level and dropped to almost $80 by the beginning of January 2018. The share price tested the $86 resistance level two more times – at the end of January and the beginning of March 2018 – only to bounce back down towards what appears to be a support level at $79. The share price closed on July 3, 2018 at $82.55, which was just 4% short of the peak from December 2017. Additionally, this closing price was 5.8% higher than it was one year earlier, 7.4% above the 52-week low from August 2017 and nearly doubled its level from five years ago.
MMC’s upcoming quarterly payout of $0.415 per share is 10.7% higher than the $0.375 payout from the previous period. On an annual basis, this amount translates to $1.66 and a forward yield of 2%, which is 5.8% higher than the company’s own 1.9% average dividend yield over the past five years. Additionally, MMC’s current 2.3% yield is almost 25% above the 1.62% simple average yield of all the companies in the Insurance Brokers industry segment.
Looking at a one-year chart of MMC’s stock price performance shows no less than six peaks followed by a sharp decline. The 52-week low of $76.88 was reached on August 24, 2017 and was followed by a 10.2% rise to the year high of $85.97 on December 4, 2017. Over the next three months, the share price bounced between the $86 resistance level and the $80 level three times. The stock eventually settled in May 2018 and found support above $79, where it has traded since. Marsh and McLennan closed on July 3, 2018 at $82.55, which was just 4% short of the peak from December 2017. Additionally, this closing price was 5.8% higher than it was one year earlier, 7.4% above the 52-week low from August 2017 and nearly double its level from five years ago.
The moderate, but steady, asset appreciation and rising dividend income combined for a 7.5% total return over the past 12 months. Over the past three years, the total return was significantly higher at 51%. However, the five-year total return is nearly double that amount: 120%.