Insights

QBE (ASX:QBE) share price up 7% after dividend boost

the insurance company has upgraded its dividend schedule in its FY21 half year earnings report.
The post QBE (ASX:QBE) share price up 7% after dividend boost appeared first on The Motley Fool Australia. –

The QBE Insurance Group Ltd (ASX: QBE) share price has jumped into the green from the market open, now exchanging hands at $12.39 apiece, a 7% climb.

QBE shares are on the move after the insurance giant upgraded its dividend schedule in its FY21 half year earnings report.

Let’s investigate further.

QBE’s dividend

Historically QBE has exhibited a rather flat level of annual growth in its dividend schedule.

For instance, from October 2015 – April 2020, QBE increased its dividend from 20 cents per share, to 27 cents per share, a compound annual growth rate (CAGR) of around 6%. Then, QBE gave its dividend a large haircut to 4 cents/share in September 2020.

In its FY21 half-year results, QBE confirmed its board had “declared an interim dividend of 11 cents per share, up from 4 Australian cents per share in the prior period”.

The insurance heavyweight scaled up its payout on the back of “strong first half growth”, that saw gross written premium (GWP) increase by around 27%, and net earned premium (NEP) rise roughly 9%.

Moreover, it recognised an underwriting result of US$642 million, which came through to an adjusted cash profit of $463 million, versus a loss of US$66 million. QBE recognised an 11.9% return on equity as a result.

What does this mean for investors?

The step-up in QBE’s dividend normalises the payout shareholders will receive back towards historical averages. In addition, restoration of a company’s dividend schedule is a sign of confidence from its management on the future trajectory of its earnings curve.

Furthermore, equally as assuring is when a company does so coming out of a period of economic uncertainty. It gives a clear impression of the company’s financial health, in terms of liquidity and assets. Moreover, it demonstrates a company is generating a high amount of free cash flow and cash from operations, on healthy margins through its profit and loss statement.

We see evidence of the same in QBE’s half-year results, particularly in cash flow metrics such as net profit after tax (NPAT), which grew from a loss of $712 million in June 2020 to a profit of $441 million this year.

Compounding this, QBE realised a more favourable expense ratio, down to 13.7% from 14.3% a year prior. In addition, QBE’s debt to equity ratio compressed to 31.1%, down from 34.8% a year ago.

Given these growth levers in the company’s growth engine, QBE undoubtedly believes the dividend is well covered as we walk through the coming periods.

Therefore, it stands to reason that investors have favoured the news coming out of QBE’s camp this morning. Shareholders can expect the 11 cents per share dividend to arrive in their bank accounts franked at 10%, as per the release.

QBE share price snapshot

The QBE share price has posted a year to date gain of 45%, extending the previous 12 month’s climb of 23%.

Both of these results have outpaced the S&P/ASX 200 Index (ASX: XJO)’s return of around 25% over the past year.

Over the past month alone, QBE shares have climbed 18% into the green.

The post QBE (ASX:QBE) share price up 7% after dividend boost appeared first on The Motley Fool Australia.

Wondering where you should invest $1,000 right now?

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes could be the five best ASX stocks for investors to buy right now. These stocks are trading at near dirt-cheap prices and Scott thinks they could be great buys right now.

*Returns as of May 24th 2021

More reading

ASX 200 midday update: Telstra, NAB, & QBE results

Why GrainCorp, Myer, QBE, & Telstra shares are storming higher

QBE (ASX:QBE) share price in focus after delivering strong first half growth
How did the QBE (ASX:QBE) share price respond last earnings season?
Here are the 10 top moving ASX shares on Monday

The author Zach Bristow has no positions in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

Trade The World Anywhere & Anytime!

Mobile app platform with over 50,000 global listed securities across 12 markets (over 70% global market capitalisation), right from your Android or iOS device.

Integrated with exclusive trading idea and investment analysis tools to help you find actionable insight on virtually every financial instrument across our 12 global markets, to help you optimise your trading strategies.

Refer Your Friends

Tell your friends about Monex and gift them FREE access to our trading tools.

We respect your privacy and will only send this one email notification to your friends. 

Share With Your Friends

Share on facebook
Share on twitter
Share on linkedin

Monex Trading Tools Access and Usage Terms

The Monex Trading Tools (referred to as ‘tools’ hereafter) are available to you inside your client portal;


To activate access to the tools, you must have a verified and approved trading account and have made a deposit of at least AUD $1000.


An active and funded account with a positive trading balance is required to continue to have access to the tools;


Although the tools are available to you indefinitely, Monex Securities may at it’s discretion disable access to the tools in the future;


Monex securities reserves the right to change these terms and conditions from time to time, as it sees fit, without notice.

Important Notice
iOS & Android App - 12 International Markets & Over 70% Global Market Cap. $0 Brokerage On US Trades. Click Here!