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5 Dividend-Paying Multiline Insurers That Ensure Stable Income
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Investors look for returns on their investments in the form of dividends. Amid volatile market conditions, companies that have an impressive dividend history are always investors’ favorites.
The Zacks Multiline Insurance industry has lost 12.1% year to date. However, Assurant Inc. (AIZ - Free Report) , Radian Group Inc. (RDN - Free Report) , Old Republic International Corporation (ORI - Free Report) , MetLife Inc. (MET - Free Report) and Prudential Financial Inc. (PRU - Free Report) , with their impressive dividend history, offer investors a breather.
Insurers, backed by strong fundamentals, enjoy a solid capital position that in turn supports effective capital deployment. Multiline insurers benefit from a diversified portfolio that lowers concentration risk. Increased awareness drives demand for protection products, which benefits sales and premiums of life insurance operations. Continued improvement in pricing is expected to support premium growth of non-life insurance operations. Also, an increase in exposure of intangibles and cyber threats offers room for growth for non-life insurers. Per Deloitte Insights, life insurance premiums are estimated to increase 1.9% in 2023 while non-life premiums are expected to increase 2.2%. The report also stated that trends like commercial lines witnessing growth at a faster pace than personal lines and homeowners’ premiums improving at a better rate than personal auto are likely to continue in 2023.
Insurers invest a portion of their premium income. Therefore, higher the rates. better the investment results. Also, the interest rate environment is improving. The Fed has already made three hikes in 2023, taking the tally to 10 since March 2022. Also, investment income is an important component of insurers’ top line. However, concerns related to whether Fed will pause further hikes remain. Thus, all eyes are on the outcome of the two-day Fed meeting concluding this Thursday. These solid fundamentals should help companies to maintain dividend streak
Players are investing heavily in technology to improve scale and efficiencies. While a solid policyholders’ surplus helps the industry absorb losses, a sturdy capital level aids insurers in pursuing strategic mergers and acquisitions, investing in growth initiatives, engaging in share buybacks, and increasing dividends or paying out special dividends.
Dividend Stocks for Your Portfolio
In this volatile market, stocks that give regular dividends offer an attractive investment opportunity. Regular dividend hikes reflect a company’s confidence in operational strength, which, in turn, fuels earnings power.
With the help of the Zacks Stock Screener, we have selected five multiline insurers that have a Zacks Rank #1 (Strong Buy) or #2 (Buy) or #3 (Hold), a dividend yield of more than 2% as well as a five-year historical dividend growth rate of more than 2%. These stocks have a payout ratio of less than 60, reflecting enough room for future dividend increases. You can see the complete list of today’s Zacks #1 Rank stocks here.
Assurant, with a market capitalization of $6.7 billion, is a global provider of risk management solutions in the housing and lifestyle markets, protecting people’s homes and the goods they buy. The insurer sports a Zacks Rank #1.
The insurer has increased dividends for 18 straight years since its initial public offering in 2004. The insurer’s payout ratio is 26, with a five-year dividend growth rate of 4.6%. Its annual dividend of $2.80 currently yields 2.2%. (Check Assurant’s dividend history here)
Increased mobile subscribers in North America, inorganic and organic growth strategies, higher average insured values, and effective capital deployment bode well for growth. Assurant has a strong capital management policy supporting effective capital deployment. Also, traditionally, AIZ has been utilizing 50% of its free cash flow to repurchase shares.
Radian Group, with a market capitalization of $3.1 billion, is a credit enhancement company, which supports homebuyers, mortgage lenders, loan servicers and investors with a suite of private mortgage insurance and related risk-management products and services.
Radian witnessed a four-year CAGR of 199.1%. Riding on continued financial strength and flexibility, RDN declared a 22.5% increase in quarterly dividend in the first quarter of 2023, This is the fourth consecutive year when RDN has increased the quarterly dividend with a total increase of 80% over the past three years. Its current dividend yield of 3.5% betters the industry average of 2.8%. The insurer’s payout ratio is 19, with a five-year dividend growth rate of 228.9%. (Check Radian Group’s dividend history here)
Radian’s mortgage insurance portfolio is expected to create a strong foundation for future earnings. RDN remains focused on improving its mortgage insurance portfolio, the main catalyst of long-term earnings growth. Also, given the strong credit characteristics of the new loans insured, we expect RDN to see fewer claims than before. Radian Group maintains a solid balance sheet with sufficient liquidity and strong cash flows. A strong capital position helps this Zacks Rank #2 insurer deploy capital via share repurchases and dividend hikes that enhance shareholders value.
Old Republic International, with a market capitalization of $6.4 billion, engages in the insurance underwriting and related services business primarily in the United States and Canada. The insurer carries a Zacks Rank #2.
ORI has an impressive dividend history, banking on a solid capital position. The third-largest title insurer in the country increased dividends for 41 straight years and paid out dividends for the last 81 years, besides paying special dividends occasionally. Its dividend yield of 4.5% betters the industry average of 2.5%. Old Republic is one of the 111 companies with at least 25 consecutive years of annual dividend growth. The insurer’s payout ratio is 31, with a five-year dividend growth rate of 4.1%. (Check Old Republic International’s dividend history here)
ORI’s solid market presence, niche focus, low property catastrophe exposure in its General Insurance segment and robust capital position auger well for growth. ORI continues to strengthen its balance sheet by improving its cash balance while lowering its leverage ratio.
Old Republic International Corporation Dividend Yield (TTM)
MetLife, with a market capitalization of $48.5 billion, is an insurance-based global financial services company providing protection and investment products to a range of individual and institutional customers.
Since 2011, the company has been successfully raising its quarterly dividend at a CAGR of 9.5%. Its current dividend of $2.00 yields 3.9%. The insurer’s payout ratio is 32, with a five-year dividend growth rate of 3.9%. (Check MetLife’s dividend history here).
This Zacks Rank #3 insurer’s focus on streamlining its business, numerous acquisitions and partnerships, and balance sheet will drive long-term growth. MET has undertaken strategies to control cost and increase efficiency and remains optimistic about achieving a direct expense ratio below the target set for 2022. A strong balance sheet, coupled with sound free cash flows, supports its shareholder value-boosting effort.
Prudential, with a market capitalization of $32.4 billion, is a financial services leader that offers an array of financial products and services, including life insurance, annuities, retirement-related services, mutual funds, investment management and real estate services.
PRU has been increasing its dividend for the past 14 years. Its dividend yield of 5.9% compares favorably with the industry’s figure of 2.5%. The insurer’s payout ratio is 56, with a five-year dividend growth rate of 7%. (Check Prudential’s dividend history here).
PRU is on track to reprice as well as move toward lower-risk and less capital-intensive products. As this Zacks Rank #3 insurer transforms to becoming a higher growth, less market-sensitive business, it expects to double its growth businesses to more than 30% of earnings and the individual annuities business to 10% or less of earnings. PRU remains focused on investing in businesses to expand its addressable market and to continue to improve expense and capital efficiency. Prudential envisions about a 65% free cash flow ratio of earnings and about two times its dividend.
Image: Bigstock
5 Dividend-Paying Multiline Insurers That Ensure Stable Income
Investors look for returns on their investments in the form of dividends. Amid volatile market conditions, companies that have an impressive dividend history are always investors’ favorites.
The Zacks Multiline Insurance industry has lost 12.1% year to date. However, Assurant Inc. (AIZ - Free Report) , Radian Group Inc. (RDN - Free Report) , Old Republic International Corporation (ORI - Free Report) , MetLife Inc. (MET - Free Report) and Prudential Financial Inc. (PRU - Free Report) , with their impressive dividend history, offer investors a breather.
Insurers, backed by strong fundamentals, enjoy a solid capital position that in turn supports effective capital deployment. Multiline insurers benefit from a diversified portfolio that lowers concentration risk. Increased awareness drives demand for protection products, which benefits sales and premiums of life insurance operations. Continued improvement in pricing is expected to support premium growth of non-life insurance operations. Also, an increase in exposure of intangibles and cyber threats offers room for growth for non-life insurers. Per Deloitte Insights, life insurance premiums are estimated to increase 1.9% in 2023 while non-life premiums are expected to increase 2.2%. The report also stated that trends like commercial lines witnessing growth at a faster pace than personal lines and homeowners’ premiums improving at a better rate than personal auto are likely to continue in 2023.
Insurers invest a portion of their premium income. Therefore, higher the rates. better the investment results. Also, the interest rate environment is improving. The Fed has already made three hikes in 2023, taking the tally to 10 since March 2022. Also, investment income is an important component of insurers’ top line. However, concerns related to whether Fed will pause further hikes remain. Thus, all eyes are on the outcome of the two-day Fed meeting concluding this Thursday. These solid fundamentals should help companies to maintain dividend streak
Players are investing heavily in technology to improve scale and efficiencies. While a solid policyholders’ surplus helps the industry absorb losses, a sturdy capital level aids insurers in pursuing strategic mergers and acquisitions, investing in growth initiatives, engaging in share buybacks, and increasing dividends or paying out special dividends.
Dividend Stocks for Your Portfolio
In this volatile market, stocks that give regular dividends offer an attractive investment opportunity. Regular dividend hikes reflect a company’s confidence in operational strength, which, in turn, fuels earnings power.
With the help of the Zacks Stock Screener, we have selected five multiline insurers that have a Zacks Rank #1 (Strong Buy) or #2 (Buy) or #3 (Hold), a dividend yield of more than 2% as well as a five-year historical dividend growth rate of more than 2%. These stocks have a payout ratio of less than 60, reflecting enough room for future dividend increases. You can see the complete list of today’s Zacks #1 Rank stocks here.
Assurant, with a market capitalization of $6.7 billion, is a global provider of risk management solutions in the housing and lifestyle markets, protecting people’s homes and the goods they buy. The insurer sports a Zacks Rank #1.
The insurer has increased dividends for 18 straight years since its initial public offering in 2004. The insurer’s payout ratio is 26, with a five-year dividend growth rate of 4.6%. Its annual dividend of $2.80 currently yields 2.2%. (Check Assurant’s dividend history here)
Increased mobile subscribers in North America, inorganic and organic growth strategies, higher average insured values, and effective capital deployment bode well for growth. Assurant has a strong capital management policy supporting effective capital deployment. Also, traditionally, AIZ has been utilizing 50% of its free cash flow to repurchase shares.
Assurant, Inc. Dividend Yield (TTM)
Assurant, Inc. dividend-yield-ttm | Assurant, Inc. Quote
Radian Group, with a market capitalization of $3.1 billion, is a credit enhancement company, which supports homebuyers, mortgage lenders, loan servicers and investors with a suite of private mortgage insurance and related risk-management products and services.
Radian witnessed a four-year CAGR of 199.1%. Riding on continued financial strength and flexibility, RDN declared a 22.5% increase in quarterly dividend in the first quarter of 2023, This is the fourth consecutive year when RDN has increased the quarterly dividend with a total increase of 80% over the past three years. Its current dividend yield of 3.5% betters the industry average of 2.8%. The insurer’s payout ratio is 19, with a five-year dividend growth rate of 228.9%. (Check Radian Group’s dividend history here)
Radian’s mortgage insurance portfolio is expected to create a strong foundation for future earnings. RDN remains focused on improving its mortgage insurance portfolio, the main catalyst of long-term earnings growth. Also, given the strong credit characteristics of the new loans insured, we expect RDN to see fewer claims than before. Radian Group maintains a solid balance sheet with sufficient liquidity and strong cash flows. A strong capital position helps this Zacks Rank #2 insurer deploy capital via share repurchases and dividend hikes that enhance shareholders value.
Radian Group Inc. Dividend Yield (TTM)
Radian Group Inc. dividend-yield-ttm | Radian Group Inc. Quote
Old Republic International, with a market capitalization of $6.4 billion, engages in the insurance underwriting and related services business primarily in the United States and Canada. The insurer carries a Zacks Rank #2.
ORI has an impressive dividend history, banking on a solid capital position. The third-largest title insurer in the country increased dividends for 41 straight years and paid out dividends for the last 81 years, besides paying special dividends occasionally. Its dividend yield of 4.5% betters the industry average of 2.5%. Old Republic is one of the 111 companies with at least 25 consecutive years of annual dividend growth. The insurer’s payout ratio is 31, with a five-year dividend growth rate of 4.1%. (Check Old Republic International’s dividend history here)
ORI’s solid market presence, niche focus, low property catastrophe exposure in its General Insurance segment and robust capital position auger well for growth. ORI continues to strengthen its balance sheet by improving its cash balance while lowering its leverage ratio.
Old Republic International Corporation Dividend Yield (TTM)
Old Republic International Corporation dividend-yield-ttm | Old Republic International Corporation Quote
MetLife, with a market capitalization of $48.5 billion, is an insurance-based global financial services company providing protection and investment products to a range of individual and institutional customers.
Since 2011, the company has been successfully raising its quarterly dividend at a CAGR of 9.5%. Its current dividend of $2.00 yields 3.9%. The insurer’s payout ratio is 32, with a five-year dividend growth rate of 3.9%. (Check MetLife’s dividend history here).
This Zacks Rank #3 insurer’s focus on streamlining its business, numerous acquisitions and partnerships, and balance sheet will drive long-term growth. MET has undertaken strategies to control cost and increase efficiency and remains optimistic about achieving a direct expense ratio below the target set for 2022. A strong balance sheet, coupled with sound free cash flows, supports its shareholder value-boosting effort.
MetLife, Inc. Dividend Yield (TTM)
MetLife, Inc. dividend-yield-ttm | MetLife, Inc. Quote
Prudential, with a market capitalization of $32.4 billion, is a financial services leader that offers an array of financial products and services, including life insurance, annuities, retirement-related services, mutual funds, investment management and real estate services.
PRU has been increasing its dividend for the past 14 years. Its dividend yield of 5.9% compares favorably with the industry’s figure of 2.5%. The insurer’s payout ratio is 56, with a five-year dividend growth rate of 7%. (Check Prudential’s dividend history here).
PRU is on track to reprice as well as move toward lower-risk and less capital-intensive products. As this Zacks Rank #3 insurer transforms to becoming a higher growth, less market-sensitive business, it expects to double its growth businesses to more than 30% of earnings and the individual annuities business to 10% or less of earnings. PRU remains focused on investing in businesses to expand its addressable market and to continue to improve expense and capital efficiency. Prudential envisions about a 65% free cash flow ratio of earnings and about two times its dividend.
Prudential Financial, Inc. Dividend Yield (TTM)
Prudential Financial, Inc. dividend-yield-ttm | Prudential Financial, Inc. Quote