Insurance company Chubb (CB) is a favorite holding of legendary investor Warren Buffett, owing largely to its dividend payment.
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Chubb, which is based in Switzerland, is primarily a property and casualty insurer. Through his holding company, Berkshire Hathaway (BRK.B), Buffett owns nearly 10% of Chubb, a position that’s currently worth $11.1 billion. The famed investor began accumulating CB stock in 2023, making it one of his newest holdings.
Buffett is well-known for liking insurance companies. He’s also a notorious dividend investor. These qualities no doubt attracted him to Chubb, which pays a strong dividend that the company consistently grows. Recently, Chubb announced that it is raising its quarterly dividend by 5% to $1.02 per share. It marks the 33rd consecutive year that the insurance company has increased its distribution.
A Strong Yield for Chubb
Chubb is known as a Dividend Aristocrat, a term applied to any company that raises its dividend for 25 consecutive years or longer. The newest dividend hike, pushes the yield on CB stock to a healthy 1.25%. Buffett no doubt likes that Chubb has faithfully increased its payout to shareholders over the years.
The valuation on CB stock is also likely attractive to Buffett. Currently, Chubb’s shares trade at 12 times this year’s earnings estimates, which is about half the price-to-earnings ratio among stocks listed in the S&P 500 index. Buffett almost never buys stocks trading at more than 15 times earnings estimates.
Is CB Stock a Buy?
Chubb stock has a consensus Moderate Buy rating among 19 analysts. That rating is based on seven Buy, 10 Hold, and two Sell recommendations issued in the last three months. The average CB price target of $344.28 implies 6% upside from current levels.
