In this article, we discuss 5 of the best insurance dividend stocks to buy. If you want to see more of the best insurance dividend stocks to buy, go directly to 11 Best Insurance Dividend Stocks To Buy Now.
5. American International Group, Inc. (NYSE:AIG)
Dividend Yield as of 10/25: 2.36%
Number of Hedge Fund Holders: 44
American International Group, Inc. (NYSE:AIG) is one of the largest insurance companies in the world whose shares have done relatively well versus the market in 2022. While the S&P 500 is down around 20% year to date, American International Group, Inc. (NYSE:AIG) shares have fallen only 4.5% year to date. One reason could be the interest rate increases, and another reason could be that American International Group, Inc. (NYSE:AIG) repurchased $1.7 billion of common stock in the second quarter. American International Group, Inc. (NYSE:AIG) also has a dividend yield of 2.36% as of 10/25.
On October 12, Yaron Kinar of Jefferies upgraded American International Group, Inc. (NYSE:AIG) to ‘Buy’ from ‘Hold’ and raised his price target to $64 from $57. Kinar believes the company has more earnings momentum than what some other analysts expect.
4. The Progressive Corporation (NYSE:PGR)
Dividend Yield as of 10/25: 0.33%
Number of Hedge Fund Holders: 54
The Progressive Corporation (NYSE:PGR) has been one of the better performers in the S&P 500 this year with a year to date return of around 19% as many in the market expect the company to improve its margins and also gain market share in the next few years. Although it only has a dividend yield of 0.33% as of 10/25, The Progressive Corporation (NYSE:PGR)’s dividend has growth potential given The Progressive Corporation (NYSE:PGR)’s expected earnings growth in the next five years as well as the company’s low payout ratio. 54 hedge funds in our database owned shares of The Progressive Corporation (NYSE:PGR) at the end of Q2, 2022, ranking it #4 on our list of 15 Best Insurance Dividend Stocks To Buy Now.
3. Cigna Corporation (NYSE:CI)
Dividend Yield as of 10/25: 1.44%
Number of Hedge Fund Holders: 66
Cigna Corporation (NYSE:CI) has outperformed in 2022 with shares up 35.4% year to date. Although shares trade at 2.13 times book value, analysts expect the company’s earnings to rise fairly quickly over the next five years. Cigna Corporation (NYSE:CI)’s earnings per share growth could also be helped by buybacks as the company announced in February 2022 that it has increased its share repurchase authorization by an aggregate of $6 billion to a total capacity of $10 billion. As of 10/25, Cigna Corporation (NYSE:CI) also has a dividend yield of 1.44%.
2. Humana Inc. (NYSE:HUM)
Dividend Yield as of 10/25: 0.59%
Number of Hedge Fund Holders: 69
Humana Inc. (NYSE:HUM) shares have risen 14% year to date as the company benefits from growth in core Medicare Advantage as well as value-based care initiatives. Although Humana Inc. (NYSE:HUM)’s dividend yield as of 10/25 is only 0.59%, the company’s dividend has room to grow in the future given its expected EPS growth rate in the next five years.
Baron Funds commented on Humana Inc. (NYSE:HUM) in a Q3 Q3 2022 investor letter,
“We added to our position in Humana Inc. (NYSE:HUM), a managed health care company which we believe is benefiting from favorable secular trends, including the aging of the population, increasing adoption of Medicare Advantage over traditional Medicare, and the shift to value-based health care. Humana has two businesses, a health plan business and a health care services business. The health plan business is focused on the Medicare Advantage (MA) program, a government program under which the Center for Medicare & Medicaid Services (CMS) contracts with private sector health insurance companies to provide health insurance benefits in exchange for contractual payments from CMS. Overall Medicare enrollment is growing as the baby boomer generation ages into the Medicare program and MA is growing faster than traditional Medicare because MA companies provide additional benefits like dental, vision, and hearing coverage at no extra cost. These trends should continue to drive growth in MA enrollment for many years. Humana is a strong number two player in MA after UnitedHealth and has typically grown its MA business faster than the market.
In Humana’s health care services business, which is branded CenterWell, the company provides pharmacy services, home care services, and operates primary care clinics. Humana is one of the largest senior-focused, value-based primary care organizations and is also the largest home health organization in the country. Humana’s health care services business is higher margin and faster growing than the health plan business and should help drive margin expansion and earnings growth for the consolidated business. At a recent Investor Day, management provided a 2025 adjusted EPS growth target of $37, representing a 14% CAGR from 2022.”
1. UnitedHealth Group Inc. (NYSE:UNH)
Dividend Yield as of 10/25: 1.22%
Number of Hedge Fund Holders: 91
With 91 hedge fund holders in our database owning shares of UnitedHealth Group Inc. (NYSE:UNH) at the end of the second quarter, the stock ranks #1 on our list of 15 Best Insurance Dividend Stocks To Buy Now.
In 2022, UnitedHealth Group Inc. (NYSE:UNH) has rallied 7.6% year to date and the stock also has a dividend yield of 1.22% as of 10/25.
On 10/18, George Hill of Deutsche Bank raised his price target on UnitedHealth Group Inc. (NYSE:UNH) to $615 from $569 and kept a ‘Buy’ rating citing strong Q3 results as membership growth remains strong and as the company’s value based arrangements grow.
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