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Arthur J. Gallagher Hikes Its Dividend More Than Expected

Arthur J. Gallagher & Co. (AJG) is an international service provider that plans, designs and administers a full array of customized property, and casualty insurance and risk management programs.

The company generated 70% of its revenue from its brokerage segment, 13% from its risk management segment and 17% from its corporate segment during the third quarter of 2020. Within these segments, the company generated 48% of its revenue from commissions, 17% from fees and 17% from a clean coal investment.

Better Than Expected Q4

Arthur J. Gallagher reported fourth-quarter revenue that fell by 0.6% to $1.67 billion, beating consensus estimates by $120 million, with non-GAAP earnings of 88 cents per share, beating consensus estimates by ten cents. Management aims to grow revenue through a combination of organic growth and a pipeline of mergers and acquisitions.

During its earnings call, CEO J. Gallagher said that strong cash flows led it to raise its dividend a bit more than most analysts expected. He added that the company will continue to look at the amount of the raise each year, but didn’t comment on a specific target payout ratio.

The company raised its quarterly dividend by 6.7% to $0.48 per share, which represents a 1.6% forward yield. The dividend is payable on March 19, 2021 to shareholders on record as of March 5, 2021.

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