AIG (NYSE:AIG) announced a change in dividend policy and a stock repurchase program. The company will be hiking the current $0.165 quarterly dividend by approximately 20% with the May declaration.
PAYOUT YIELD ANALYSIS
We are projecting the new annualized dividend to be $0.80 per share. In addition, AIG uncovered plans to repurchase $8 billion of stock, with $5 billion targeted for 2007. With 2.6 billion shares outstanding, the $5 billion repurchase will yield $1.92 per share. We use the $5 billion instead of the $8 billion figure because AIG does not repurchase shares every quarter. For example, the company did not buy back any shares in Q4 2006 under the existing repurchase program.
The new dividend of $0.80 combined with the $1.92 from the repurchase program will result in at Total Payout of $2.72 per share over the next 4 quarters. At $69 per share, the Total Payout Yield is projected to be 3.9%.
- Payout Yield staff