Suncorp Group Ltd (ASX: SUN) today announced a special dividend following the sale of its Australian Life Business to TAL Dai-ichi Life Australia Pty Ltd.
Suncorp is a $17 billion insurance and banking company with its own brand of products, but also operates under names like AAMI, GIO, Apia and Shannons.
Australian Life was the life insurance branch of the business. The sale, which was finalised late last month for $725 million, has compelled Suncorp to follow through with paying a special dividend that they hinted at last month in the announcement of the sale. The dividend will be 8 cents per share.
The ex-dividend date has been announced as 1st April 2019, with a payment date of 3rd May 2019.
When the completed deal was announced in February, Suncorp advised that they expect to return $600 million of the $725 million sale price to shareholders from the sale, after “taking into account separation and transaction costs, hybrid capital and other provisions.”
The special dividend represents approximately $100 million of the net proceeds.
As for the remaining $500 million to be returned to shareholders, Suncorp stated: “The preferred means of distributing the balance of the capital generated from the sale (expected to be around $500 million) continues to be through seeking shareholder approval for a pro-rata return of share capital and share consolidation, which remains subject to shareholder approval.”
Following the sale Suncorp commenced, “a 20-year strategic alliance with TAL to offer market-leading life insurance solutions through Suncorp’s Australian distribution channels.”
Through this strategic alliance, Suncorp will earn income on the distribution of life insurance issued by TAL.
Suncorp currently has a dividend yield of approximately 4.99%, somewhat lower than the four big banks. If you’re seeking shares for dividend income, this article introduces three ASX blue chips paying big dividends.
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Disclaimer: At the time of writing, Max does not own shares in any of the companies mentioned.
