The Zacks Property and Casualty Insurance industry has performed well so far this year, banking on improving pricing, prudent underwriting, increased exposure, streamlined operations, global presence and a solid capital position. The industry has gained 12.7% year to date.

The economy has been growing, albeit slowly. GDP increased at an annualized rate of 4.9% in the third quarter. The growth rate is expected to slow down to 0.7% in the fourth quarter per a Treasury Department forecast posted on CNBC. Fed estimated GDP to grow 1.5% in 2024 at its September FOMC meeting.

Slowdown in growth is likely to induce market volatility. Thus, industry players like Chubb Limited (CB Quick QuoteCB - Free Report) , Cincinnati Financial Corporation (CINF Quick QuoteCINF - Free Report) and The Travelers Companies, Inc. (TRV Quick QuoteTRV - Free Report) , with an impressive dividend history, are expected to be on yield-seeking investors’ radar as they ensure steady returns.

Although the industry’s performance is affected by catastrophe events, both natural and man-made, prudent underwriting and better pricing help players stay afloat. Global commercial insurance prices increased 3% in the third quarter of 2023, marking the 24th straight quarter of price rise, per Marsh Global Insurance Market Index. Per reports on the Insurance Portal, financial and professional lines, as well as cyber, remained soft. However, property insurance prices increased. Improvement in pricing drives premiums and thus eases claims payment.

Also, the interest rate environment is improving. The Fed made four hikes in 2023, taking the tally to 11 since March 2022. An improving rate environment is a boon for insurers, especially long-tail insurers. Also, investment income is an important component of insurers’ top line.

Industry players remain focused on digitalization to improve scale and efficiencies. While a solid policyholders’ surplus will help the industry absorb losses, a sturdy capital level supports inorganic expansion, investment in growth initiatives and capital payout to shareholders.

Dividend Stocks for Your Portfolio  

Stocks that give regular dividends offer an attractive investment opportunity as investors always look for greater yields and return on investments. Regular dividend hikes reflect confidence in operational strength, which, in turn, fuel earnings power.

With the help of the Zacks Stock Screener, we have selected three property and casualty insurers with dividend yield and five-year historical dividend growth of more than 2% each. These stocks have a payout ratio of less than 60, reflecting enough room for future dividend increases.

Chubb Limited, with a market capitalization of $92.5 billion, is one of the world’s largest providers of property and casualty (P&C) insurance and reinsurance and the largest publicly traded P&C insurer based on market capitalization. It carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

CB has increased dividends for 30 consecutive years. Its current dividend of $3.44% yields 1.5%, better than the industry average of 0.3%. The insurer’s payout ratio is 19, with a five-year dividend growth rate of 3.4%. (Check Chubb’s dividend history here)

A compelling portfolio, strong renewal retention, positive rate increases and strategic initiatives to fuel profitability poise Chubb for growth. Its growth strategy includes an increased focus on capitalizing on the potential of middle-market businesses (both domestic and international) along with enhancing the traditional core package and specialty products. Chubb boasts a strong capital position with sufficient cash-generation capabilities. The insurer continues to have an exceptionally strong capital position and a conservative level of leverage and operating cash flow, supporting effective capital deployment.

Cincinnati Financial, with a market capitalization of $16 billion, markets property and casualty insurance. It carries a Zacks Rank #2.

CINF has increased the annual cash dividend rate for 62 consecutive years, a record that is believed to be matched by only seven other U.S. publicly traded companies. Its current dividend of $3.00% yields 2.9%, better than the industry average of 0.3%. The insurer’s payout ratio is 60, with a five-year dividend growth rate of 3.4%. (Check Cincinnati Financial’s dividend history here)

Several growth initiatives and price increases, a higher level of insured exposures, rate increases, an agent-focused business model, consistent cash flow generation, and favorable reserve release poise it well for growth. CINF expects 2023 property-casualty premium to grow 8%, while its agent-focused business model will drive long-term premium growth.

Travelers Companies, with a market capitalization of $39 billion, is one of the leading writers of auto and homeowners’ insurance plus commercial U.S. property-casualty insurance. TRV carries a Zacks Rank #3 (Hold).

TRV has increased dividends for 19 consecutive years with a compound annual growth rate of 8% over that period. Its current dividend of $4.00 yields 2.3%, better than the industry average of 0.3%. The insurer’s payout ratio is 42, with a five-year dividend growth rate of 4.9%. (Check Travelers Companies’ dividend history here)

Travelers’ comprehensive portfolio of coverages across nine lines of business is likely to help it maintain high levels of retention, improve pricing and increase new business while achieving a positive renewal premium change. TRV maintains a conservative balance sheet among its peers. At the end of the third quarter of 2023, statutory capital and surplus were nearly $23.2 billion. It aims to generate increased earnings and capital in excess of growth needs and maintain a balanced approach to rightsizing capital and growing book value per share over time as part of its long-term financial strategy.