Chubb Limited (NYSE:CB) ranks third on our list of the best cash-rich stocks that pay dividends. The insurance company offers a wide range of related products and services to its consumers. Insurance stocks are notable for their robust pricing power, which remains strong regardless of economic conditions. After catastrophic losses, insurers can raise premiums, and even when claims are lower, they can justify increases by highlighting future risks. In essence, insurers function as reliable, profit-generating entities.
Chubb Limited (NYSE:CB) stands out due to its focus on high-income customers, particularly in the homeowner insurance sector. Wealthier individuals are less likely to change their spending habits or default on bills and premiums during mild economic downturns, offering greater stability for the company. In the third quarter of 2024, the company reported a net income of $2.32 billion, which showed a 13.8% growth from the same period last year. The stock has returned by over 21% since the start of 2024.
In Q3, Chubb Limited (NYSE:CB) reported an operating cash flow of $4.55 billion, and its trailing twelve-month operating cash flow comes in at $14.8 billion. This solid cash position has allowed the company to raise its payouts for 31 consecutive years. Its quarterly dividend comes in at $0.91 per share for a dividend yield of 1.32%, as recorded on December 16.
The London Company made the following comment about CB in its Q3 2024 investor letter:
Initiated: Chubb Limited (NYSE:CB) – CB engages in the provision of commercial and personal property and casualty insurance, personal accident and health (A&H), reinsurance, and life insurance. While the company is headquartered outside the U.S., roughly 2/3 of its profits are generated in the U.S. with Asian markets representing another 20% of earnings. CB has a portfolio of top-performing, multibillion-dollar businesses that have substantial scale and yet potential for growth. CB has a culture of superior underwriting discipline, and management has a strong track record of expense control. CB also has a well-balanced mix of business by customer and product, with extensive distribution channels. We are attracted to CB’s globally diversified business model, superior underwriting and expense management, consistent and best-in-class profitability, upside potential from growth in Asia, and the potential to benefit from higher interest rates in its investment portfolio.
As per Insider Monkey's database of Q3 2024, 51 hedge funds held stakes in Chubb Limited (NYSE:CB), growing from 46 in the preceding quarter. These stakes are worth over $10 billion in total. Warren Buffett’s Berkshire Hathaway owned the largest stake in the company, valued at $7.8 billion.
Overall CB ranks 3rd on our list of the cash-rich dividend stocks to invest in now. While we acknowledge the potential of CB as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than CB but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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