4 Dividend-Paying Multiline Insurers to Add to Your Portfolio
Price appreciation is always what investors look for as returns on their investments. Along with this, they are always searching for stocks that have an impressive dividend history.
The Zacks Multiline Insurance industry players like MGIC Investment Corporation MTG, CNO Financial Group CNO, Old Republic International Corporation ORI and The Hartford Financial Services Group, Inc HIG, with their impressive dividend history, attract investors. Solid fundamentals have helped these companies build a solid capital position and maintain their dividend payments.
Given the nature of their business, multiline insurers benefit from a diversified portfolio that lowers concentration risk. While higher demand for protection products benefits sales and premiums of life insurance operations, better pricing supports premium growth of non-life insurance operations. Also, an increase in exposure to intangibles and cyber threats offers room for growth to 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%. Per the 2024 global insurance outlook published in Financial Services, U.S. demand for catastrophe reinsurance is expected to grow, putting upward pressure on prices.
Insurers invest a portion of their premium income. Therefore, the higher the rates, the better the investment results. Also, the interest rate has improved significantly from historic lows. The Fed has already made 11 hikes since March 2022. Investment income is an important component of insurers’ top line.
In this era of digitalization, players are investing heavily in technology to improve scale and efficiencies. This should help them generate higher margins and improve profitability.
These positives together help insurers build solid policyholders’ surplus that 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 four multiline insurers that have a Zacks Rank #2 (Buy) each, 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.
MGIC Investment, with a market capitalization of $4.9 billion, is the largest private mortgage insurer in the United States. The insurer’s payout ratio is 18, with a five-year dividend growth rate of 19.5%. Its annual dividend of 46 cents currently yields 2.2%. (Check MGIC Investment’s dividend history here)
Higher insurance in force, resulting from an increase in new business written, higher annual persistency, a decline in loss and claims payments, lower delinquency, better housing market fundamentals and prudent capital deployment, bodes well for growth and should ensure continued dividend payouts.
MGIC Investment Corporation Dividend Yield (TTM)
MGIC Investment Corporation dividend-yield-ttm | MGIC Investment Corporation Quote
CNO Financial, with a market capitalization of $3 billion, is a top-tier holding company for a group of insurance companies operating throughout the United States. It develops, administers, and markets supplemental health insurance, annuity, individual life insurance and other insurance products.
CNO Financial has been raising its quarterly dividend since 2013. Its current dividend yield is 2.3%. The insurer’s payout ratio is 24, with a five-year dividend growth rate of 8.6%. (Check CNO Financial’s dividend history here)
Improved premiums, driven by a well-diversified product portfolio comprising health insurance, annuity, individual life insurance and other insurance products, acquisitions and partnerships, technology upgrades and a sound financial position, poise it well for growth.
CNO Financial Group, Inc. Dividend Yield (TTM)
CNO Financial Group, Inc. dividend-yield-ttm | CNO Financial Group, Inc. Quote
Old Republic International, with a market capitalization of $8.2 billion, engages in the insurance underwriting and related services business primarily in the United States and Canada.
ORI has an impressive dividend history, banking on a solid capital position. This 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 3.4% betters the industry average of 2.6%. Old Republic is one of the 111 companies with at least 25 consecutive years of annual dividend growth. The insurer’s payout ratio is 36, with a five-year dividend growth rate of 4.9%. (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 bode 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
The Hartford Financial, with a market capitalization of $23.6 billion, is one of the major multi-line insurance and investment companies in the country, providing investment products, group life and group disability insurance, property and casualty insurance and mutual funds in the United States.
The company has been successfully raising its quarterly dividends. It has a five-year dividend growth rate of 9.1%. Its current dividend of $1.70 yields 2.2%. The insurer’s payout ratio is 21. (Check Hartford Financial’s dividend history here).
HIG is set to grow on the strength of its improving premiums, driven by rate hikes, solid retention rate and new business growth, acquisitions and product launches, as well as adequate cash-generating abilities.
The Hartford Financial Services Group, Inc. Dividend Yield (TTM)
The Hartford Financial Services Group, Inc. dividend-yield-ttm | The Hartford Financial Services Group, Inc. Quote
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The Hartford Financial Services Group, Inc. (HIG) : Free Stock Analysis Report
MGIC Investment Corporation (MTG) : Free Stock Analysis Report
CNO Financial Group, Inc. (CNO) : Free Stock Analysis Report
Old Republic International Corporation (ORI) : Free Stock Analysis Report
