The 6 Best Dividend Paying Insurance Stocks - Sure Dividend Insurance stocks

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Updated on top of May 31st, 2019 via Nathan Parsh

Insurance companies much enjoy a high level about profitability, because they produce money within two ways. First, assurance companies collect premium gains on top of the policies they underwrite.

Second, they are able to produce money via investing the large sums about accumulated premiums that have not been waged away while claims.

Due to this, assurance companies have been among the most rewarding to own on top of the past several decades. In fact, many about the Dividend Aristocrats and Dividend Achievers are within the assurance industry.

The Dividend Aristocrats are a select company about 57 S&P 500 stocks with 25+ years about consecutive dividend increases.

The requirements to exist a Dividend Aristocrat are:

• Be within the S&P 500
• Have 25+ consecutive years about dividend increases
• Meet certain minimum size & liquidity requirements

You can download an Excel spreadsheet about all 57 (with metrics that matter) via clicking the connection below:

The assurance business has created many great fortunes. That’s because it’s slow changing and highly profitable, assuming the trade is done well. Investing within assurance stocks is how Shelby Davis made $900 million from $50,000 starting within his overdue 30’s.

In not long past years, the assurance business (and additional parts about the business sector like banks) have benefited from the key increase catalyst about rising interest rates. Higher interest rates widen the spread amidst what assurance companies can earn on top of their invested capital, versus what they pay away within claims.

As the Federal Reserve appears likely to continue short term interest rates at current levels, this catalyst may not provide assurance companies much increase within the short term.

Still, there are a number about insurers that look attractively priced today that are poised to deliver strong total annual returns on top of the later five years. This article determination level the top 6 assurance stocks within order about projected total annual returns by way of 2024.

Table Of Contents

• Aflac (AFL)
• The Travelers Companies (TRV)
• Everest Re Group (RE)
• Allstate Corporation (ALL)
• A.J. Gallagher (AJG)
• Old Republic International (ORI)

Top Insurance Company #6: Aflac Incorporated (AFL)

With 37 consecutive years about dividend growth, Aflac is a Dividend Aristocrat, which are a select company about stocks with at least 25 consecutive years about dividend increases. Shares give a bow about 2.1% at the moment.

Aflac sells supplemental assurance products that are designed to recompense policy holders within the event that they become unable to work expected to sickness or injury. Approximately 75% about the company’s premium gains comes from Japan. This means the company’s earnings-per-share are largely dependent on top of the exchange rates amidst the yen and the dollar.

When the yen rises against the dollar, it helps Aflac because every yen is extra valuable. But when the yen weakens, it results within fewer dollars to exist reported. Fortunately for Aflac, the yen has shown signs about strengthening within not long past years.

Aflac reported operating revenues about $21.8 billion within 2018 compared to $21.7 billion within 2017. Earnings-per-share grew 22% for the year. A stronger yen played a positive role within every case. Currency, however, is a purely business impact. It is extra important to focal point on top of the health about the underlying business.

Aflac’s trade fundamentals are sound. The business continues to note the potential for increase within both the U.S. and Japan. The over-arching factor behind the outlooks for both countries is their aging populations.

Source: Investor Presentation

Aflac’s strategic initiatives to develop the U.S. trade include a two-channel distribution model. This determination allow the business to continue to focal point on top of the expansion about its core distribution procedures, while skilfully while increased adoption about ‘one day pay’, to raise customer satisfaction.

At the same time, Aflac’s operational goals within Japan include more expansion about the company’s third-sector product sales. Third-sector products are non-traditional supplemental polices. One such product that has knowledgeable strong increase is cancer insurance. Aflac expects low single digit gains for third-sector products within the years to come.

Aflac reported first-quarter financial results on top of 4/25/2019. Earnings-per-share increased 6.7% to $1.12, which was $0.06 upon the average analysts’ estimate. Revenue grew 3.5% to $5.7 billion, topping expectations via $200 million. This was the highest revenue result and year-over-year increase rate since the fourth quarter about 2016. The yen/dollar exchange rate within the earliest quarter was 2% weaker than the average rate within the earliest quarter about 2018.

Aflac’s Japan operations saw a minor decrease within revenue while limited-pay products reached paid-up status. Net investing gains improved 5.4% expected to higher gains from dollar-denominated floating rate assets. U.S. operations produced a 1.5% raise within sales. Net investing gains for this part grew 1.1%. The business had a $131 billion investing swimming pool at the conclusion about the earliest quarter.

Aflac’s earnings-per-share have grown at a rate about 7.8% on top of the preceding decade. To help account for the swings within currency translation, we anticipate a 6% annual increase rate by way of 2024.

Aflac reiterated its  earnings guidance about $4.20 per part for the year. Using the current part cost about $52, the holdings has a price-to-earnings rate about 12.4. The stock’s 10-year average price-to-earnings rate is 10. If shares were to trade at this rate via 2024 then valuation would negatively impact total returns via 4.2% per year.

Total returns would exist made up about the following:

• 6% earnings-per-share growth
• 2.1% dividend yield
• 4.2% multiple reversion

We think that shares about Aflac determination give a total annual come back about just 3.9% by way of 2024. The dividend determination represent the majority about future returns. Fortunately, Aflac is a high-quality dividend increase stock. It is a Dividend Aristocrat, and the dividend appears highly secure. The following YouTube video more illustrates our view about the company’s dividend safety.

Aflac has a long history about dividend increase and should benefit from aging populations within the U.S. and Japan. Still, the stock’s valuation, while low compared to the rest about the market, removes much about our expected total return.

As a result, investors should stay for a lower entry point earlier than purchasing shares about Aflac.

Top Insurance Company #5: The Travelers Companies (TRV)

With a mart capitalization about practically $39 billion, Travelers is only about the largest assurance companies on top of this list. In 2018, the business generated a full twelve months record about $27.7 billion within netting premiums written. This was a 6% raise from the previous year.

Its policies were split into the following categories:

• Business & International Insurance (59% about premiums written)
• Personal Insurance (33% about premiums written)
• Bond & Specialty Insurance (8% about premiums written)

Travelers operates a highly money-making trade and generates solid increase every year. As such, the business has been able to reward shareholders with dividend increase for many years.

Source: Investor Relations

After increasing its dividend via 6.5% for the 6/28/2019 payment, Travelers has now raised its dividend for 15 consecutive years. This makes the business a member about the Dividend Achievers, which is a company about stocks with at least 10 consecutive years about dividend growth.

And, Travelers has waged dividends to shareholders for practically 150 years. Over the past 10 years, it has increased dividends via 9.1% compounded annually. Shares currently bow 2.3%.

Travelers has been able to accomplish such strong dividend increase rates because about its efficient strategy for creating shareholder value.

Source: Earnings Presentation

The company’s long-term goal is to reach a come back on top of equity within the mid-teens every year. Travelers has reached this goal almost every twelve months since 2005.

Source: Earnings Presentation

One reason for this is that Travelers works to keep costs about capital low. The business has a ‘AA’ credit rating, which helps within that regard. As a result, it sole raises sufficient capital while needed to support the trade and future increase objectives, so long while it does not endanger its credit rating.

Some capital generated via the trade is returned to shareholders. Travelers not sole pays a dividend, but it and has spent vast sums about capital repurchasing shares. Since initiating its part repurchase program within 2006, the business has returned extra than $40 billion to investors within combined dividends and repurchases.

These strategies have worked skilfully for the company’s shareholders. Over the past 20 years, Traveler’s book importance has compounded via practically 7% annually.

The business reported earliest quarter financial results on top of 4/18/2019. Results were strong while earnings-per-share grew 15% to $2.83. This was $0.10 upon the average analysts’ estimate. Revenue increased 4.9% to $6.9 billion, thought this was $88 million below expectations.

Gross written premiums improved 6% to a new record about $7.8 billion. Net written premiums grew 3% to a $7.1 billion. The company’s profitability increased while catastrophe losses were lower.

The underlying combined rate improved 80 bps to 91.6% expected to lower losses and higher margins. Traveler’s part count was lowered via 3% compared to the earliest quarter about 2018. The company’s book importance increased 7% through the quarter.

Traveler’s is expected to earn $11.00 per part within 2019, which would exist an raise about almost 19% from 2018. Over the later five years, we think earnings-per-share to develop at a rate about 6%. This is upon the company’s 10-year average increase about 3.5%. Higher revenues and lower part count determination exist the drivers about this growth.

Shares about Traveler’s currently trade for $148. Using our estimates for earnings-per-share for the current year, the holdings has a price-to-earnings rate about 13.5. We have a 2024 price-to-earnings rate mark about 11x earnings. If shares were to revert to this target, valuation would exist a 4% headwind to total annual returns.

Total annual returns determination consist about the following:

• 6% earnings-per-share growth
• 2.3% yield
• 4% multiple reversion

Added up and we think Travelers to give a total annual come back about 4.3% by way of 2024.

Traveler’s size gives it scale that is largely unmatched via additional insurers. The business continues to come back capital to shareholders and offers a dividend bow upon the mart average.

That said, we think low single digit returns on top of the later five years at the current price. We encourage investors to stay for a pullback earlier than purchasing shares about Travelers. Or, to see another holdings on top of our list.

Top Insurance Company #4: Everest Re Group (RE)

Everest Re Group is a holding business that provides customers with assurance and reinsurance services.

Source: Investor Overview

Nearly three quarters about the company’s trade comes from reinsurance with assurance composing the rest about sales. The business trades with a mart capitalization about $10.2 billion, making it only about the smaller companies on top of this list.

Everest Re is composed about several segments. The U.S. Reinsurance provides possessions and casualty reinsurance services while skilfully while a special lines about trade such while maritime, aviation and health. The business and has operations within Canada, Singapore and Bermuda. Everest Re is and only about the youngest companies on top of our list while it was founded within 1999.

While a relatively young company, shareholders about Everest Re have seen solid returns.

Source: Investor Overview

Between gains within book importance and dividends, shareholders have seen a compound annual increase rate about 12% since inception.

Everest Re has sole waged shareholders a dividend since 2002 and has just six consecutive years about dividend growth. This is the shortest dividend increase streak among the stocks on top of this list. Over the past five years, dividends have been compounded at a rate about 6.6% annually. Everest Re’s holdings yields 2.4%.

The business reported earliest quarter results on top of 5/6/2019. Everest Re earned $6.91 per share, $1.01 upon estimates and a 29% raise from the previous year. Revenue grew 10.7% to $1.9 billion, which was $30 million extra than expected.

Gross written premiums were up 10% to $2.1 billion while worldwide reinsurance premiums grew 7% to $1.5 billion. Growth came from an raise within casualty and possessions premiums while skilfully while new business. Direct assurance premiums were higher via 18%. Everest’s combined rate improved 460 bp and the business repurchased $16.2 million worth about shares through the quarter.

Everest Re has guided towards $23.83 per part within earnings this year. This would exist extra than 5x preceding year’s results, which were low expected to catastrophe losses. We think earnings to develop at 5.8% annually by way of 2024 expected to improved trade performance and part repurchases.

Everest Re’s holdings is currently valued at $250 per share. Using the company’s guidance for the year, the stock’s price-to-earnings rate is 10.5. We believe that a fair valuation is 9x earnings. If this were to occur via 2024 then annual returns would exist reduced via 3% annually on top of this time period.

Everest Re’s total annual returns are projected to exist while follows:

• 5.8% earnings-per-share growth
• 2.4% dividend yield
• 3% multiple reversion

Added up, we forecast that Everest Re’s total annual come back potential is 5.2%. As such, the holdings receives a hold recommendation at this time.

Top Insurance Company #3: Allstate Corporation (ALL)

With a mart lid about $32 billion, Allstate Corporation is only about the larger assurance companies within the holdings market. Allstate offers possessions and causality assurance to its customers. In addition, the business provides life, accident and health assurance products. Allstate is composed about several brands, containing Allstate, Encompass and Esurance.

Shares off Allstate sport a 2% dividend yield, the lowest bow on top of this list. Still, this is slightly upon the average bow about the S&P 500.

Despite the low yield, Allstate has made it a goal to provide sizable returns on top of shareholders’ equity.

Source: Earnings Presentation

Return on top of equity has shown strong improvement on top of the preceding two years. While the most not long past quarter saw a minor dip, the come back is still upon what Allstate produced prior to 2017. Book importance has improved via 3.6% annually from 2014 to 2018. Book importance within the earliest quarter, however, grew 8.5% year-over-year and 10.5% from the fourth quarter about 2018.

Allstate reported first quarter results on top of 5/1/2019.

Source: Earnings Presentation

The business earned $2.30 per part within the quarter, missing estimate via $0.02 and declining extra than 22% from the previous year. Consolidated revenues grew 12.5% to $11 billion.

The chief reason for a steep drop within profits was expected to a practically 90% raise within catastrophe losses.

Overall, most about Allstate’s businesses performed well. Property and casualty assurance premiums grew almost 7% to $8.7 billion. Allstate brand car had a 4.7% raise within netting written premiums expected to extra policies within place at a higher average premium. Allstate brand homeowners netting written premiums were higher via 6.8%. Services trade had a 25% raise within revenues. The combined rate grew 4.3% year-over-year expected to higher catastrophe losses.

Allstate is slated to earn $9.14 per part this year, which would exist an improvement about almost 14% from the prior year. Earnings-per-share have extra than doubled on top of the past decade. We conservatively estimate that the business can develop earnings at a rate about 4% going forward.

The holdings currently trades at $96 a share. Using estimated earnings-per-share for the year, the stock’s price-to-earnings rate is 10.5. This is slightly below our targeted valuation about 10.9x earnings. Multiple expansion could add 0.4% to annual returns on top of the later half decade.

Total returns for shares about Allstate would exist while follows:

• 4% earnings-per-share growth
• 2% dividend yield
• 0.4% multiple expansion

Allstate’s holdings could give a total annual come back about 6.4% going forward. The holdings offers the lowest dividend bow on top of this list and only about the lower increase rates. Shares do give the potential for a minor tailwind from valuation. We see the holdings to exist a hold and would stay for a pullback earlier than purchasing.

If an investor is interested within owning an assurance holdings today, we suggest they see only about the following companies while they every receive buy recommendations from Sure Dividend at this time.

Top Insurance Company #2: A.J. Gallagher (AJG)

A.J. Gallagher has been within trade since 1927. It is a commercial assurance broker with an emphasis on top of danger management. A.J. Gallagher has operations within 33 countries, providing customers with assurance and danger control programs. The holdings has a mart capitalization about $15.6 billion.

The business has grown on top of the years by way of acquisitions.

Source: Annual Report

A.J. Gallagher has added extra than 500 businesses since 2002, with 48 acquisitions within 2018 alone. Many about these acquisitions have provided the business a place within new niche areas or regions.

These acquisitions have and added to the company’s business performance. Acquisitions within 2018 alone added $340 million within revenues. This is a significant amount when you see that A.J. Gallagher generates approximately $5.7 billion within annual revenues.

These improvements within trade operations have allowed A.J. Gallagher to raise its dividend every twelve months since 2011. Over the preceding five years, the dividend has compounded at a rate about 2.6% annually. At the same time, the holdings currently yields 2.1%. The holdings traded with a 3%+ bow while recently while 2016 and with a 5%+ bow through the preceding recession. Still, we don’t anticipate the bow or dividend increase to exist at a high rate within the near term.

That doesn’t mean the holdings isn’t worth owning. A.J. Gallagher’s trade has performed rather skilfully recently. Adjusted earnings-per-share increased 8% to $1.63 within the first quarter. This was $0.02 upon estimates. Revenue improved 8.6% to $2 billion, which was slightly below expectations.

The brokerage trade produced a 13% revenue gain expected to 5.7% organic increase while skilfully while contributions from acquisitions. The danger control division provided 6% revenue growth, with 4.1% organic increase and the remainder coming from acquisitions.

We think A.J. Gallagher to earn $3.90 per part within 2019, which would exist a 15% raise from the prior year. The business has compounded earnings-per-share at a 10% rate on top of the past decade. We forecast earnings to develop via 9% annually by way of 2024 expected to increases within organic revenue increase and acquisitions.

Shares about A.J. Gallagher trade hands for approximately $84. Based on top of expected earnings-per-share, the holdings has a price-to-earnings rate about 21.5. This is the highest valuation about stocks on top of this list, but not very far upon our targeted valuation about 20x earnings. If the holdings were to trade at our targeted multiple via 2024 then valuation would reduce annual returns via 1.4% by way of 2024.

Total returns would exist while follows:

• 9% earnings-per-share growth
• 2.1% dividend yield
• 1.4% multiple reversion

A.J. Gallagher is expected to come back 9.7% per twelve months for the later five years. While the holdings may not bow while much while it did 10 years ago, the bow is still slightly upon that about the market. Even better, the business has our highest projected earnings increase on top of the later five years.

We feel that A.J. Gallagher has a solid combination about earnings increase potential and dividend yield. We rate the holdings while a buy currently.

Top Insurance Company #1: Old Republic International (ORI)

Old Republic has the longest dividend increase streak on top of this list. It has raised its shareholder payout for the past 38 years. The business has waged uninterrupted dividends to shareholders for 78 years. Shares currently bow 3.6%, the highest bow on top of this list.

Old Republic was founded within 1923 and today trades with a mart capitalization about $6.7 billion. This makes the business the smallest insurer on top of this list. Old Republic markets, underwrites and provides danger control services for a variety about general and title insurances.

The business has a diversified customer base, made up about many different business groups. Over the years, Old Republic has reduced its exposure to housing, business and energy industries while increasing its exposure to transportation and general industry

This has helped the business to improve its trade on top of time. Old Republic reported business results for the first quarter on top of 4/25/2019. The business earned $0.40 per share, $0.02 upon the average estimate. Earnings were flat year-over-year. Revenue grew 2.3% to $1.5 billion, $22 million upon estimates.

Net premiums and fees earned grew 2.1% while netting investing gains grew 5.9%. General assurance grew 5.1%, which was partially offset via declines about 1.4% within title assurance and 12.3% within corporate. Book importance per part grew 13% from the earliest quarter about 2018.

Shares about Old Republic are estimated to earn $1.90 per part this year, representing 2.2% increase from a twelve months ago. The business has sole posted a profit since 2013. Since then, earnings have grown at a rate about 7% annually. We think this increase rate to continue on top of the later five years.

Old Republic’s holdings trades for practically $23 at the moment. Using expected earnings-per-share for 2019, the price-to-earnings rate is 12.1. We have a targeted price-to-earnings rate about 12.5, which is slightly below the six-year average rate about 14. This helps to account for the lack within profitability about the early years about the preceding 10-year period. If this mark comes to fruition, valuation would add 0.7% to annual returns by way of 2024.

Total returns would exist while follows:

• 7% earnings-per-share growth
• 3.6% dividend yield
• 0.7% multiple expansion

Old Republic is expected to come back 11.3% per twelve months by way of 2024. While the company’s history is slightly uneven compared to the additional stocks on top of this list, shares about Old Republic give substantially higher yield. There is and a chance about minor multiple expansion on top of the later five years. For the investor with a slightly higher danger tolerance, Old Republic could prove to exist a good purchase at current levels.

Final Thoughts

Insurance is much considered to exist boring, but investors looking for solid annual returns and dividend gains should see stocks within this industry. Many about the stocks on top of this list have increased dividends for at least a decade. Some have done so for multiple decades.

Not sole has practically every business exhibited a pattern about even dividend increase for many years, all have an upon mart average dividend bow while well. As a result, these stocks are appealing for gains investors.

Investors looking for exposure to this business could note the strongest returns from A.J. Gallagher or Old Republic, the two stocks currently receiving buy recommendations from Sure Dividend.

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