Last, but certainly not least, AIG’s reinstatement of its quarterly dividend places it back into an important segment of the stock market: dividend growth stocks. Though the current dividend is a small $0.10 per share, the equivalent of a 0.8% annualized yield, income investors should be looking at the company with some patience. Not only will AIG be executing a $1 billion share repurchase plan in the coming months, which will cut into the share dilution that occurred subsequent to the governmental bailout, but dividend increases are surely on the horizon.
Competitor Metlife Inc (NYSE:MET) is close to AIG in both size and scope, and it currently pays investors $1.10 per share — a 2.3% yield and a healthy target that AIG might eventually aim for. Though AIG’s management is keeping a tight hold on its available cash for now (in order to scope out new acquisitions and other investments), shareholders should be reassured by CEO Benmosche’s statements that the company’s priority of capital management and debt reduction has created a $600 million in annualized savings — twice the amount the company will be paying in dividends.
AIG offers plenty of opportunities for investors willing to hang on while the company takes advantage of myriad projects and opportunities. By focusing in on your investing method and how AIG fits into your plan, you can see the insurer is a prime candidate for your portfolio. And by expanding your focus, you’ll see the insurer is also attractive to investors of all methods and creeds.
The article 3 Types of Investors That Should Be Gobbling Up AIG Shares originally appeared on Fool.com and is written by Jessica Alling.
Fool contributor Jessica Alling has no position in any stocks mentioned. The Motley Fool recommends American International Group. The Motley Fool owns shares of American International Group and has the following options: long January 2014 $25 calls on American International Group.
Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.