In this article, we discuss 5 undervalued dividend aristocrats to buy in 2022. If you want our detailed analysis of these stocks, go directly to 10 Undervalued Dividend Aristocrats to Buy in 2022.
5. Chubb Limited (NYSE:CB)
Number of Hedge Fund Holders: 34
Dividend Yield as of February 25: 1.55%
Number of Years of Consecutive Dividend Increases: 29
P/E Ratio: 10.74
Chubb Limited (NYSE:CB) is headquartered in Zurich, Switzerland, providing insurance and reinsurance products to customers worldwide. Chubb Limited (NYSE:CB) is a notable undervalued dividend aristocrat to buy in 2022, offering a price to earnings ratio of 10.74 and 29 consecutive years of dividend increases.
Chubb Limited (NYSE:CB) posted its Q4 results on February 1, announcing earnings per share of $3.81, outperforming estimates by $0.53. The $8.52 billion revenue also surpassed consensus estimates by $5.86 million.
On February 24, Chubb (NYSE:CB) declared a $0.80 per share quarterly dividend, in line with previous. The dividend is payable on April 8, to shareholders of record on March 18. Chubb Limited (NYSE:CB) offers a dividend yield of 1.55% as of February 25.
Argus analyst Kevin Heal raised the price target on Chubb Limited (NYSE:CB) on February 10 to $230 from $210 and kept a Buy rating on the shares. The analyst cited the company’s Q4 earnings beat, stating that Chubb Limited (NYSE:CB) has benefited from a strong brand, an experienced management team, and a healthy balance sheet.
The fourth quarter database of Insider Monkey suggested that 34 hedge funds were bullish on Chubb Limited (NYSE:CB), up from 30 funds in the preceding quarter. Billionaire Andreas Halvorsen’s Viking Global held the leading stake in Chubb Limited (NYSE:CB), with 3.6 million shares worth $713.6 million.
Here is what Davis Funds has to say about Chubb Limited (NYSE:CB) in their Q4 2020 investor letter:
“Chubb is now among the Fund’s largest P&C holdings at 5.2% and illustrates well why we thought there was an opportunity to add to our P&C names. Through September 30, 2020, Chubb had returned −24% for the year, reflecting investors’ fears that (1) the insurance industry would be compelled to cover substantial business interruption claims that were never intended as part of insured’s policies, (2) declining long-term rates would diminish the value of “float” (i.e., customers’ funds that insurers get to hold and invest until claims are paid), and (3) adverse trends (pre-dating the pandemic) in insured loss rates (e.g., rising litigation and settlement costs, increased frequency and severity of catastrophe losses, etc.).
With industry economics already soft, it was only a matter of time before insurance pricing would have to adjust. In fact, P&C pricing had already begun to increase in a number of business lines before COVID hit, and that trend has only increased and broadened since then. Chubb disclosed in Q3 2020 that North American commercial P&C pricing increased by more than 15% in aggregate. Some of the price increase will go to cover rising insurance loss rates, but we certainly do anticipate some dropping into underwriting profit too. Admittedly, some of that increased underwriting profit will itself get offset by a decline in investment income owing to lower interest rates, but that is a “feature,” if you will, of P&C insurance companies. Unlike a bank, where the floor on its deposit funding costs practically speaking is zero, there is in theory no reason underwriting profit cannot increase to offset low interest rates, so it is feasible for its earnings to “normalize” far in advance of an eventual rise in long-term rates. (Click here to read full text)
