Market News

Marsh & McLennan Ups Share Buyback Plan by $5B, Announces Quarterly Dividend

Marsh & McLennan Companies, Inc. (NYSE: MGM) has announced rewards for shareholders in the form of an incremental share buyback program and quarterly dividends. Both the rewards have been approved by the company’s board of directors.

Despite the positive news, shares of this professional service company declined slightly on Wednesday, closing the trading session at $162.55.

Marsh & McLennan provides risk management, insurance, reinsurance broking, employee benefits consulting, and other services. The company is headquartered in New York and has a market capitalization of $81.7 billion.

Inside the Headlines

The company has been authorized to repurchase an additional $5 billion worth of shares. This authorization, along with the $1.3 billion left (of the November-2019 program) at the end of 2021, brings Marsh & McLennan’s total share buyback approvals to $6.3 billion.

Also, Marsh & McLennan has received approval for paying a quarterly dividend of $0.535 per share on May 13, 2022. It mentioned that all the shareholders in the company’s record as of April 6, 2022, will be entitled to receive dividends.

Marsh & McLennan repurchased 7.9 million shares for $1.16 billion and distributed dividends totaling $1.03 billion in 2021. However, the company refrained from repurchasing any shares in 2020 and distributed dividends of $0.94 billion.

Analysts’ Take

Last month, David Motemaden, an analyst at Evercore ISI, reiterated a Neutral rating on Marsh & McLennan while lowering the price target to $174 (7.04% upside potential) from $178.

Marsh & McLennan has a Hold consensus rating based on one Buy, six Holds, and one Sell. The average Marsh & McLennan price target of $169.38 suggests 4.2% upside potential from current levels. Over the past year, shares of Marsh & McLennan have surged 39.73%.

Risk Analysis

According to the TipRanks Risk Factors tool, Marsh & McLennan stock is at risk mainly from three factors: Finance & Corporate, Production, and Macro & Political. While the Finance & Corporate risk category contributes nine risks to the total 32 risks identified for the company, Production and Macro & Political account for eight and seven risks, respectively.

Conclusion

Marsh & McLennan has bought back $7 billion worth of shares in the past 10 years and increased dividends for 12 consecutive years. Such history, along with the new announcements, is reflective of the company’s solid financials and cash position.

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