Earlier this month, investors learned of the mysterious stock that Warren Buffett’s Berkshire Hathaway (NYSE:BRK.A)(NYSE:BRK.B) invested in. Berkshire disclosed in its recent 13f filings that it has a $6.7 billion stake in insurance company Chubb Limited (NYSE:CB). Buffett has long been a fan of insurance companies and so it’s not a terribly surprising type of investment.
Shares of Chubb jumped on the news of the disclosure, as is often the case with many Buffett-backed stocks once investors learn that Berkshire has a stake in them. Chubb’s stock is now trading at its 52-week high and year to date, it has risen by around 20%.
Last week, Chubb also announced that it was going to increase its dividend by 5.8%. The increase extends its streak of annual dividend increases to 31 years. The new quarterly dividend of $0.91 per quarter means that the stock’s yield will be approximately 1.3%, which is slightly below the S&P 500 average of around 1.5%.
Chubb’s business has sound financials, why is not a surprise given Buffett’s investment in the company. In the trailing 12 months, Chubb has generated $9.3 billion in earnings on revenue of $51.8 billion, for a solid profit margin of just under 18%.
And with the stock trading at just 12 times its trailing earnings and less than two times its book value, it’s still a fairly priced investment overall. It’s usually not a bad idea to follow Buffett’s investment moves, and with Chubb having some excellent financials and also being a solid dividend growth stock, there are multiple reasons to add it to your portfolio today.
