4 P&C Insurance Stocks With Decent Dividend for a Steady Return

The Zacks Property and Casualty Insurance industry is well-poised to benefit from better pricing, prudent underwriting, increased exposure, an improving rate environment and a solid capital position. With the ongoing economic expansion, insurers remain well-poised for growth. The buoyancy in the industry is further confirmed by its Zacks Industry Rank #40, which places it in the top 16% of more than 246 Zacks industries.However, industry players continue to grapple with issues like higher catastrophe events, both natural and man-made, which drag down underwriting profit. Per CoreLogic, the risk modelling and catastrophe data company, the initial estimate for insured losses from the Los Angeles, CA, wildfires is expected to be between $35 billion and $45 billion. Per Moody’s RMS Event Response, the insured losses for the January 2025 Los Angeles firestorm events are estimated in the range of $20-$30 billion.Despite these challenges surrounding the industry, the property and casualty (P&C) insurance industry has returned 16.6% in the year-to-date period, outperforming the Finance sector’s growth of 3.4% and the Zacks S&P 500 composite’s decline of 4.1%.Image Source: Zacks Investment ResearchIndustry players that boast an impressive dividend history have always attracted yield-seeking investors. Property and casualty insurers like The Hanover Insurance Group, Inc. THG, Cincinnati Financial Corporation CINF, First American Financial Corporation FAF and Fidelity National Financial, Inc. FNF have been investors’ favorites, driven by their solid fundamentals that ensure consistent dividend payments.Global commercial insurance rates decreased 2% in the fourth quarter of 2024, which marked the second consecutive quarterly decrease after seven years of rising rates, per the Marsh Global Insurance Market Index.Price hikes, operational strength, higher retention, strong renewal and the appointment of retail agents should help write higher premiums. Per Deloitte Insights, gross premiums are estimated to exceed $722 billion by 2030.Analysts at Swiss Re Institute predict industry return on equity (ROE) of 10% in 2025 and 2026 as higher investment return, offset by a gradual weakening in underwriting profitability. Swiss Re Institute increased the premium growth estimate to 5% (from 4%) for 2025 as inflation pressures may slow rate declines. Swiss Re also forecasts 4% premium growth in 2026.The insurance industry is rate-sensitive. An improving rate environment is a boon for insurers, especially long-tail insurers. The Fed has held the borrowing rate targeted between 4.25% and 4.5% since December. The Fed officials project two rate cuts for 2025, totaling 50 basis points. With a large invested asset base, investment income should remain healthy.A solid capital level supports insurers in pursuing strategic mergers and acquisitions to gain market share, expand in niche areas and diversify operations into new business lines and geography, as well as increase dividends, pay special dividends and buy back shares. Per a report from Willis Towers Watson’s Quarterly Deal Performance Monitor, Merger and acquisition activity is projected to gain momentum in 2025, riding on improved economic conditions, curbed inflation, technology-driven deals and stabilized interest rates. Players in the insurance industry are investing heavily in technology to expedite business operations. Increased use of blockchain, artificial intelligence, advanced analytics, telematics, cloud computing, Chatbot and RoboAdvisory, and insurtech solutions curbs costs and improves basis points, scale and efficiencies. Per the Deloitte FSI Predictions article, insurers are likely to generate around $4.7 billion in annual global premiums from AI-related insurance by 2032, yielding a CAGR of nearly 80%.How to Pick Stocks With Solid Dividend Payouts?To choose some of the best dividend stocks from the aforementioned industry, we have run the Zacks Stock Screener to identify stocks with a dividend yield in excess of 2% and a sustainable dividend payout ratio of less than 60%, reflecting enough room for future dividend increases. These stocks also have a five-year historical dividend growth rate of more than 2% and a Zacks Rank #1 (Strong Buy) or 3 (Hold). You can see the complete list of today’s Zacks #1 Rank stocks here.Our Top PicksThe Hanover Insurance, with a market capitalization of $6.22 billion, is a property-casualty insurance provider offering personal, commercial and specialty coverage through its core segments, including standard lines and specialty units. THG is set to grow on sustainable competitive advantage in the independent agency market, its focus on further expansion of Specialty business, solid agency partnerships and lower exposure to property lines in challenging geographies.The company’s five-year annualized dividend growth of about 6.96% and the payout ratio of 27 not only reflect this Zacks Rank #1 insurer’s operational strength but also its commitment to distributing wealth to shareholders. This insurer also pays a special dividend. With a dividend yield of 2.1%, which is better than the industry average of 0.2%, THG is a prudent pick for yield-seeking investors. (Check The Hanover Insurance’s dividend history here.)The Hanover Insurance Group, Inc. Dividend Yield (TTM) The Hanover Insurance Group, Inc. dividend-yield-ttm | The Hanover Insurance Group, Inc. QuoteA diversified book of business, lowered coastal exposure and enhanced pricing for catastrophes, prudent pricing segmentation, growth in target states, product lines and industry classes in the middle market should help to deliver solid results. This, in turn, will help it maintain the dividend streak. THG remains focused on prudently deploying capital in profitable business initiatives and returning the excess capital to shareholders.First American Financial, with a market capitalization of $6.67 billion, provides financial services and operates through the Title Insurance and Services and Home Warranty segments. FAF remains well-poised to capitalize on the increased demand among millennials for first-time home purchases. This Zacks Rank #3 insurer is poised to rise on growing leadership in title data, benefiting from proprietary data extraction, sturdy distribution relationships, prudent underwriting and continued investments in technology.The insurer’s payout ratio is 49, with a five-year annualized dividend growth rate of 4.66%. Its current dividend yield is 3.3%. The insurer’s quarterly dividend payment witnessed a 10-year CAGR (2016-2025) of 7.58%. (Check First American’s dividend history here.)First American Financial Corporation Dividend Yield (TTM) First American Financial Corporation dividend-yield-ttm | First American Financial Corporation QuoteFAF remains focused on strategic initiatives to strengthen its product offerings, intensify focus on its core business, invest in technology and redeploy capital to areas that fetch higher returns. Banking on strong operational performance, the company distributes wealth to its shareholders via dividends. It has been increasing its dividend payout each year and buying back shares.Cincinnati Financial, with a market capitalization of $22.65 billion, provides property casualty insurance products in the United States. This Zacks Rank #3 insurer remains poised to gain from price increases, a higher level of insured exposures and several growth initiatives, which include the expansion of Cincinnati Re and Cincinnati Global. This P&C insurer intends to grow the Commercial Lines and Excess and Surplus lines through additional agency appointments, expansion of local field presence, higher renewal written premiums and higher average renewal estimated pricing.The insurer’s payout ratio is 43, with a five-year annualized dividend growth rate of 7.74%. The dividend yield of 2.4% makes Cincinnati Financial an appealing choice for investors seeking stable returns. The insurer’s quarterly dividend payment witnessed a 10-year CAGR (2016-2025) of 6.1%. (Check Cincinnati Financial’s dividend history here.)Cincinnati Financial Corporation Dividend Yield (TTM) Cincinnati Financial Corporation dividend-yield-ttm | Cincinnati Financial Corporation QuoteCincinnati Financial’s consistent cash flow continues to boost liquidity. In terms of capital management, CINF has returned capital to shareholders through share buybacks, regular cash dividends, as well as special dividends. The board had increased the annual cash dividend rate for 65 consecutive years, a record that is believed to be matched by only seven other publicly traded companies in the United States. The dividend increases reflected strong operating performance and signaled management's and the board's positive outlook and confidence in outstanding capital, liquidity and financial flexibility.Fidelity National, with a market capitalization of $17.66 billion, provides various insurance products in the United States. Fidelity National is poised to grow on market share growth, solid margin, competitive advantages, strong track record of technology innovation and wealth distribution. This Zacks Rank #3 insurer expects higher commercial volumes in the office sector and continued strength in the industrial, multifamily and energy sectors, among others, in 2025. The title business, which is its core business, is well complemented by real estate-related businesses as well as the annuities & life insurance business.The insurer’s payout ratio is 43, with a five-year annualized dividend growth rate of 9.38%. Its current dividend yield is 3.1%. Its dividends witnessed a 10-year CAGR of 9.7%. (Check Fidelity National’s dividend history here.)Fidelity National Financial, Inc. Dividend Yield (TTM) Fidelity National Financial, Inc. dividend-yield-ttm | Fidelity National Financial, Inc. QuoteBanking on operational expertise, FNF has a solid capital position that supports wealth distribution, mergers and acquisitions, organic growth initiatives and debt payments. FNF’s impressive dividend history, with the yield outperforming the industry average, makes it an investor’s favorite.7 Best Stocks for the Next 30 DaysJust released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers "Most Likely for Early Price Pops."Since 1988, the full list has beaten the market more than 2X over with an average gain of +23.9% per year. So be sure to give these hand picked 7 your immediate attention. See them now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Cincinnati Financial Corporation (CINF): Free Stock Analysis Report First American Financial Corporation (FAF): Free Stock Analysis Report The Hanover Insurance Group, Inc. (THG): Free Stock Analysis Report Fidelity National Financial, Inc. (FNF): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks