Shares in Aetna are up nearly 9% in morning trading, after the company announced a 15-fold increase in its dividend and a 2011 profit forcast that exceeded Wall Street expectations — good news from a major publicly traded health plan at a time of concern over industry prospects going forward.
Aetna said it was instituting a quarterly dividend of $0.15 per share, compared to an annual dividend of $0.04 previously. The yield is about 1.7% following the morning share run-up. Aetna is projecting 2011 operating earnings of $3.70 to $3.80 per share in 2011, up about 2% compared to $3.68 in 2010. Aetna expects premium increases in 2011 to mirror medical cost trends projected at about 7.5% to 8.5%. Medical membership is expected to fall about 4% to 17.8 million in the first quarter of 2011, compared to year-end 2010, and then stay flat over the remainder of the year.
Btw, you might be wondering which of the major Wall Street analysts had a “buy” rating on Aetna leading up to today’s announcement? Christine Arnold of Cowen and Scott Fidel of Deutsche Bank both did. Among other top analysts, Carl McDonald of Citi rates Aetna “hold,” and both Charles Boorady of Credit Suisse and Justin Lake of UBS rate Aetna “neutral.”