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INDIANAPOLIS (AP) — Anthem has hiked its quarterly cash payout to shareholders by nearly 43 percent to keep up with its rising stock price after edging past Wall Street forecasts for the recently completed fourth quarter.
The nation's second-largest health insurer said Wednesday that it will start offering in March a quarterly dividend of 62.5 cents per share, up from its previous payout of 43.75 cents per share.
That bumps the yield, which measures annual payouts against the stock price, up to 1.8 percent from 1.3 percent, based on Tuesday's closing price. That's higher than the current yields offered by dividends from Anthem's biggest competitors, UnitedHealth Group Inc. and Aetna Inc., which also have raised their dividends in the past year.
It also tops the average dividend increase of 17.5 percent last year for Standard & Poor's 500 index companies.
Anthem shares advanced 36 percent last year, setting several new all-time high prices along the way. The price has continued to rise in 2015, topping $142 earlier this month before settling back a few dollars.
The stock edged up Wednesday morning along with the broader market.
Investors have been warming up to health insurance stocks for a few years now after watching the sector weather taxes, fees and other changes brought by the health care overhaul, the massive federal law that aims to cover millions of uninsured people. They now see much less uncertainty ahead for the industry.
Insurers, in turn, have stoked that interest by fattening their dividends and buying back shares, a practice that can raise the stock price.
Neither the dividend increase nor the fourth-quarter performance offered much surprise for investors and analysts on Wednesday. Anthem executives had said last fall that they were considering a dividend hike, and the company's performance fit a forecast it made earlier this month at a conference.
Anthem's net income more than tripled in the fourth quarter to $506.7 million, or $1.80 per share, compared to the previous year, when it saw an unusual spike in medical claims.
Adjusted earnings totaled $1.73 per share, which beat average analyst expectations by a penny, according to the data firm FactSet.
The Indianapolis-based insurer's operating revenue, which excludes investment gains, climbed more than 6 percent to $18.78 billion. Analysts forecast about $19.04 billion. Operating revenue from government business which includes Medicare and Medicaid coverage, climbed 17 percent in the quarter and now makes up nearly half of the company's total.
For 2015, Anthem said it expects earnings to be greater than $9.30 per share, or $9.70 per share counting amortization of intangible assets. Like the dividend and fourth quarter performance, that also reflects previous statements from the company.
Anthem Inc. runs Blue Cross-Blue Shield coverage in several states. The insurer changed its name late last year from WellPoint to reflect a brand more familiar to consumers since it is starting to sell more coverage directly to individuals as opposed to employers or businesses.
The company's stock rose $1.05 to $138.83 on morning trading Wednesday.
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