Dividend Watch: Insurance Dividends Paying For Your Retirement (UNH, UNM, HUM, ACE)

Insurance companies are becoming less popular than lawyers.  Before you throw out the entire class of healthcare insurance, liability insurance, and property & casualty insurance, things might not be as bad as they seem.  This morning we have seen two dividend hikes from insurers.  Unitedhealth Group, Inc. (NYSE: UNH) and Unum Group (NYSE: UNM) have joined in on the game of higher dividend payouts. 

Unitedhealth Group, Inc. (NYSE: UNH) raised its payout by a sharp 30% to $0.1625 per quarter from a prior payout of $0.125.  AT $47.96, this new $0.65 annualized payout generates a dividend yield of about 1.35%.  United also authorized the repurchase of 110 million shares over time. A 1.35% payout might not sound like much but this is after a year of having a real dividend and is a signal that more hikes are likely to continue.  Like it or not, Unitedhealth is one of the surviving insurance companies even if the healthcare sector is being turned into a utility.  Utilities have high payouts.

Unum Group (NYSE: UNM) raised its $0.925 payout to $0.105 per quarter.  The new yield of $0.42 per quarter comes to 1.62% based on a $25.80 share price.  The life and disability insurance sector has so far managed to evade ‘reform’ in the same manner of healthcare and the dividend is proof.

It was just back on April 26 that Humana Inc. (NYSE: HUM) announced a new dividend rate that will be $0.25 per quarter per share of common stock that came to about 1.30% in dividend yield at the time.  Humana competes directly against Unitedhealth.  ACE Limited (NYSE: ACE) is another insurer, although it is a reinsurance and insurance company, which just hiked its payout back on May 18 and that yield is roughly 2% now despite the woes of Japan.

Some shareholders like stock buybacks, but almost all investors love dividends.  When companies start raising dividends like this it seems that the intention is to keep raising dividends.

JON C. OGG