Prudential Financial Inc. (PRU), the second-largest U.S. life insurer, raised its dividend by 33 percent after posting its first profit in five quarters.
The quarterly dividend of 53 cents per share is payable Dec. 19 to shareholders of record as of Nov. 26, the Newark, New Jersey-based insurer said today in a statement. The increase was the largest since a 64 percent boost in 2010 when the payout was made on an annual basis.
The insurer has rallied 62 percent this year as rising stock markets and higher bond yields reduced liabilities on retirement products in which the company guarantees minimum returns for clients. Chief Executive Officer John Strangfeld, who has been expanding in Japan and buying back shares to improve the return on equity, last week posted third-quarter profit of $1.04 billion, compared with a $584 million loss a year earlier.
“Prudential is a well-managed and diversified company with a broad portfolio,” Eric Berg, an analyst at RBC Capital Markets, said in a Nov. 7 research note. “Our conviction level remains high that the company will be able to achieve its main financial objective of a 13 percent ROE by year-end 2013 even if markets aren’t all that cooperative.”
Prudential gained 0.2 percent to $86.64 at 4:01 p.m. in New York. Larger rival MetLife Inc. (MET) slipped 1.2 percent, trimming its advance for the year to 50 percent.
MetLife increased its dividend this year for the first time since 2007, after its exit from banking limited oversight from the Federal Reserve. The quarterly payout was set at 27.5 cents a share. While MetLife kept its dividend stable during the financial crisis, Prudential cut the payout by about half in 2008.
Prudential was designated a systemically important financial institution this year, placing it under Fed supervision. MetLife, based in New York, has said it’s also under consideration for the risk label.
“To see this action so soon after the non-bank SIFI designation is encouraging to say the least,” John Nadel, an analyst at Sterne Agee & Leach Inc., said of the dividend in a research note today.
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