INDIANAPOLIS (AP) — WellPoint Inc. said it plans to raise the quarterly dividend it pays shareholders by 30 percent, an announcement that comes about week after the health insurer's stock started slipping after it named a new CEO.
The Indianapolis company said Thursday that it will pay a dividend of 37.5 cents per share in the first quarter, up from its fourth-quarter payout of 28.7 cents per share. The new dividend is payable March 25 to shareholders of record at the close of business on March 8.
In a brief statement, WellPoint did not address why its board approved the increase. Companies often look to spend cash they pile up from strong performances on shareholder dividends or stock buybacks.
WellPoint and other big insurers like UnitedHealth Group Inc., Aetna Inc. and Humana Inc. started beefing up their quarterly dividends a few years ago. The steady cash flow from dividends can make a company more attractive to investors.
The sector generally turns in strong performances each quarter, but investors have been wary of the health care overhaul's impact on insurer profitability. The overhaul promises to bring new business to health insurers by providing coverage to millions of uninsured people starting next year, but it also imposes fees and restrictions on the industry.
WellPoint's new dividend adds up to $1.50 annually, and that produces a yield of about 2.4 percent, based on the stock's Wednesday closing price of $62.58. The dividend yield is calculated by dividing the annual dividend by the company's stock price.