Fidelity National Boosts Shareholders' Value Via Dividend Hike

Strange but true: seniors fear death less than running out of money in retirement.

Also, retirees who have constructed a nest egg have valid justifications to be concerned, since the traditional ways to plan for retirement may mean income can no longer cover expenses. Some retirees are now tapping their principal to make a decent living, pressed for time between decreasing investment balances and longer life expectancies.

Retirement investing approaches of the past don't work today.

For example, 10-year Treasury bonds in the late 1990s offered a yield of around 6.50%, which translated to an income source you could count on. However, today's yield is much lower and probably not a viable return option to fund typical retirements.

That means if you had $1 million in 10-year Treasuries, the difference in yield between 1999 and today is more than $1 million.

And lower bond yields aren't the only potential problem seniors are facing. Today's retirees aren't feeling as secure as they once did about Social Security, either. Benefit checks will still be coming for the foreseeable future, but based on current estimates, Social Security funds will run out of money in 2035.

Unfortunately, it looks like the two traditional sources of retirement income - bonds and Social Security - may not be able to adequately meet the needs of present and future retirees. But what if there was another option that could provide a steady, reliable source of income in retirement?

Invest in Dividend Stocks

Dividend-paying stocks from low-risk, high-quality companies are a smart way to generate steady and reliable attractive income streams to replace low risk, low yielding Treasury and bond options.

Look for stocks that have paid steady, increasing dividends for years (or decades), and have not cut their dividends even during recessions.

One way to identify suitable candidates is to look for stocks with an average dividend yield of 3%, and positive average annual dividend growth. Many stocks increase dividends over time, helping to offset the effects of inflation.

Here are three dividend-paying stocks retirees should consider for their nest egg portfolio.

Brixmor Property (BRX)

is currently shelling out a dividend of $0.29 per share, with a dividend yield of 3.79%. This compares to the REIT and Equity Trust - Retail industry's yield of 3.61% and the S&P 500's yield of 1.49%. The company's annualized dividend growth in the past year was 4.81%. Check Brixmor Property dividend history here>>>

FNF Group (FNF)

is paying out a dividend of $0.5 per share at the moment, with a dividend yield of 3.19% compared to the Insurance - Property and Casualty industry's yield of 0.13% and the S&P 500's yield. The annualized dividend growth of the company was 6.67% over the past year. Check FNF Group dividend history here>>>

Currently paying a dividend of $0.36 per share,

Southside Bancshares (SBSI)

has a dividend yield of 4.01%. This is compared to the Banks - Southwest industry's yield of 0% and the S&P 500's current yield. Annualized dividend growth for the company in the past year was 2.86%. Check Southside Bancshares dividend history here>>>

But aren't stocks generally more risky than bonds?

Yes, that's true. As a broad category, bonds carry less risk than stocks. However, the stocks we are talking about - dividend -paying stocks from high-quality companies - can generate income over time and also mitigate the overall volatility of your portfolio compared to the stock market as a whole.

An advantage of owning dividend stocks for your retirement nest egg is that numerous companies, particularly blue chip stocks, raise their dividends over time, helping alleviate the impact of inflation on your potential retirement income.

Thinking about dividend-focused mutual funds or ETFs? Watch out for fees.

If you prefer investing in funds or ETFs compared to individual stocks, you can still pursue a dividend income strategy. However, it's important to know the fees charged by each fund or ETF, which can ultimately reduce your dividend income, working against your strategy. Do your homework and make sure you know the fees charged by any fund before you invest.

Bottom Line

Regardless of whether you select high-quality, low-fee funds or stocks, looking for a steady stream of income from dividend-paying equities can potentially lead you to a solid and more peaceful retirement.

Zacks Investment Research

RLI Corp.’s RLI board of directors approved a special cash dividend of $4.00 per share. This specialty property-casualty insurer has been paying special dividends since 2011. The latest approval marks the 15th straight special dividend.

RLI expects to pay $183 million as a special dividend. Concurrently, the board of directors announced a regular quarterly cash dividend of 29 cents per share. The special and the quarterly dividends will be paid out on Dec. 20 to shareholders of record as of Nov. 29, 2024.

The board also announced a two-for-one stock split. The two-for-one stock split will be distributed out on Jan. 15, 2025, to shareholders of record as of Dec. 31, 2024. Trading of the shares will begin post-split on Jan. 16, 2025. Both the regular and special dividends will be paid on the pre-split shares.

RLI’s Impressive Dividend History

RLI has been paying dividends for 187 consecutive quarters and increased regular dividends in the last 49 straight years. Its dividends witnessed a five-year (2019-2024) CAGR of 8.8%. Based on the stock’s Nov. 7 closing price of $166.34, the new dividend will yield 0.7%, which is better than the industry average of 0.2%.

Financial Strength and Capital Management

This insurer is one of the industry’s most profitable P&C writers, with an impressive track record of delivering 28 consecutive years of underwriting profitability. This insurer stays focused on maintaining long-term industry-leading combined ratios and book value growth. RLI’s diversified product portfolio, strong local branch-office network, focus on specialty insurance lines growth via organic opportunities and acquisitions and financial strength should continue to help boost shareholders’ returns.

The underwriter maintains a solid balance sheet with sufficient liquidity and strong cash flow, helping it meet the interests of its policyholders, enhance operations in the insurance sector and aid growth in its book value for the long term. RLI maintains a conservative underwriting and reserving policy and continues to achieve favorable reserve releases from the prior years. Return on equity, a profitability measure of how efficiently a company utilizes its shareholders' money, was 19.03% in the trailing 12 months, which compared favorably with the industry average of 7.9%.

Zacks Rank and Price Performance

Shares of this Zacks Rank #3 (Hold) property and casualty insurer have gained 25% in the year-to-date period compared with the industry’s return of 30.8%. Superior underwriting discipline and sound capital structure should help shares trend higher. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Other Insurers on the Same Path

Given a solid capital level in the insurance industry and an improving operating backdrop favoring strong operational performance, insurers like Selective Insurance Group, Inc. SIGI, American Financial Group, Inc. AFG and The Hartford Financial Services Group, Inc. HIG have resorted to effective capital deployment to enhance shareholders’ value.

The board of directors of Selective Insurance authorized a 9% increase in the quarterly cash dividend to 38 cents per share in October 2024. Such steadfast endeavors buoy confidence among investors, making it an attractive pick for yield-seeking investors. Its dividend yield of 1.4% appears attractive compared with the industry average of 0.2%.

In November 2024, American Financial declared a special cash dividend of $4.00 per share in the third quarter, the aggregate amount of this special dividend will be approximately $335 million. American Financial Group’s 2.3% dividend yield is better than the industry average of 0.2%, making the stock an attractive pick for yield-seeking investors. AFG’s robust operating profitability at the property and casualty segment and effective capital management support shareholder returns.

The Hartford Financial Services increased the quarterly common dividend per share by 11% in October 2024. Its capital appreciations, repayment of government funds and measures to de-risk its balance sheet have increased its financial strength. It also has an intelligent capital management strategy, featuring share buybacks and dividend hikes.

Zacks Investment Research

NMI Holdings NMIH reported third-quarter 2024 operating net income per share of $1.15, which beat the Zacks Consensus Estimate by 4.6%. The bottom line increased 15% year over year.

The quarterly results reflected higher premiums and net investment income, and increased persistency, which drove growth in the company’s high-quality insured portfolio.

Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.

NMI Holdings Inc Price, Consensus and EPS Surprise

NMI Holdings Inc price-consensus-eps-surprise-chart | NMI Holdings Inc Quote

Operational Update

NMI Holdings’ total operating revenues of $166 million increased 12.3% year over year on higher net premiums earned (up 10.2%) and net investment income (up 25.8%). Revenues beat the Zacks Consensus Estimate by 0.7%.

Primary insurance in force increased 6.5% to $207.5 billion. Annual persistency was 85.5%, up 10 basis points (bps) year over year. New insurance written was $12.2 billion, down 2% year over year.

Underwriting and operating expenses totaled $29.2 million, up 5.1% year over year. Insurance claims and claim expenses were $10.3 million, more than doubling year over year. The loss ratio was 7.2, which deteriorated 350 bps.

The adjusted expense ratio of 20.1 deteriorated 20 bps year over year, while the adjusted combined ratio of 27.5 fell 720 bps.

Financial Update

Book value per share, a measure of net worth, was up 7.8% year over year to $27.67 as of Sept. 30, 2024.

NMI Holdings had $133.3 million in cash and cash equivalents, which decreased 37.9% from 2023 end. The debt balance of $414.5 million increased 4.3% from the end of 2023.

The annualized adjusted return on equity was 17.5%, which contracted 150 bps year over year.

Total PMIERs available assets were $3 billion. Net risk-based required assets totaled $1.7 billion at the end of third-quarter 2024.

Zacks Rank

NMIH currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Insurers

The Travelers Companies TRV reported third-quarter 2024 core income of $5.24 per share, which beat the Zacks Consensus Estimate by 38.2%. Total revenues increased 10.7% from the year-ago quarter to $11.84 billion, primarily driven by higher premiums, net investment income, fee income and other revenues. The top-line figure beat the Zacks Consensus Estimate by 1.4%.

Travelers’ net written premiums increased 8% year over year to a record $11.31 billion, driven by strong growth across all three segments. The figure was higher than our estimate of $10.5 billion. Travelers witnessed an underwriting gain of $685 million against a loss of $136 million incurred in the year-ago quarter. The consolidated underlying combined ratio of 85.6 improved 500 bps year over year. The combined ratio improved 780 bps year over year to 93.2 due to an improvement in the underlying combined ratio and net favorable prior-year reserve development.

The Progressive Corporation’s PGR third-quarter 2024 earnings per share of $3.97 beat the Zacks Consensus Estimate of $3.40. The bottom line more than doubled year over year. Operating revenues of $19.5 billion improved 24.9% year over year and beat the consensus estimate by 2.6%.

Net premiums written were $19.5 billion in the quarter, up 25% from $15.6 billion a year ago. Combined ratio — the percentage of premiums paid out as claims and expenses — improved 340 bps from the prior-year quarter’s level to 89.

RLI Corp. RLI reported third-quarter 2024 operating earnings of $1.31 per share, beating the Zacks Consensus Estimate by 33.7%. The bottom line more than doubled year over year. Operating revenues for the reported quarter were $426 million, up 1.4% year over year. The top line beat the Zacks Consensus Estimate of $420 million.

Gross premiums written increased 13% year over year to $563.4 million. This uptick can be attributed to the solid performance of the Casualty (up 15.7%), Property (up 9.6%) and Surety segments (up 9%). Our estimate was $572.3 million. Underwriting income increased to $40.7 million from $4.2 million in the year-ago quarter. The combined ratio improved 910 bps year over year to 89.6. The Zacks Consensus Estimate for the metric was pegged at 96, while our estimate was 103.1.

Zacks Investment Research

FNF Group (FNF) came out with quarterly earnings of $1.30 per share, missing the Zacks Consensus Estimate of $1.41 per share. This compares to earnings of $1.23 per share a year ago. These figures are adjusted for non-recurring items.

This quarterly report represents an earnings surprise of -7.80%. A quarter ago, it was expected that this provider of title insurance and mortgage services would post earnings of $1.27 per share when it actually produced earnings of $1.24, delivering a surprise of -2.36%.

Over the last four quarters, the company has not been able to surpass consensus EPS estimates.

FNF Group, which belongs to the Zacks Insurance - Property and Casualty industry, posted revenues of $3.6 billion for the quarter ended September 2024, surpassing the Zacks Consensus Estimate by 7.82%. This compares to year-ago revenues of $2.78 billion. The company has topped consensus revenue estimates four times over the last four quarters.

The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call.

FNF Group shares have added about 16.6% since the beginning of the year versus the S&P 500's gain of 21.2%.

What's Next for FNF Group?

While FNF Group has underperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock?

There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately.

Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions.

Ahead of this earnings release, the estimate revisions trend for FNF Group: mixed. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #3 (Hold) for the stock. So, the shares are expected to perform in line with the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

It will be interesting to see how estimates for the coming quarters and current fiscal year change in the days ahead. The current consensus EPS estimate is $1.23 on $3.3 billion in revenues for the coming quarter and $4.53 on $12.91 billion in revenues for the current fiscal year.

Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Insurance - Property and Casualty is currently in the top 20% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.

Golub Capital BDC (GBDC), another stock in the broader Zacks Finance sector, has yet to report results for the quarter ended September 2024. The results are expected to be released on November 19.

This business development company is expected to post quarterly earnings of $0.45 per share in its upcoming report, which represents a year-over-year change of -10%. The consensus EPS estimate for the quarter has remained unchanged over the last 30 days.

Golub Capital BDC's revenues are expected to be $236.62 million, up 43.8% from the year-ago quarter.

Zacks Investment Research

Financial stocks were edging higher premarket Wednesday with the Financial Select Sector SPDR Fund recently advancing by 5.1%.

The Direxion Daily Financial Bull 3X Shares was up almost 15% and its bearish counterpart Direxion Daily Financial Bear 3X Shares was 15.3% lower.

MarketAxess Holdings shares were up more than 3% after the company reported higher Q3 earnings and revenue.

American Financial Group shares advanced by over 7% after the company reported an increase in Q3 revenue.

Hamilton Lane shares were up over 1% after the company reported higher fiscal Q2 adjusted earnings and revenue.

Palomar Holdings, Inc. PLMR reported third-quarter 2024 operating income of $1.23 per share, which beat the Zacks Consensus Estimate by 13.9%. The bottom line increased 33.7% year over year.

Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.

Palomar witnessed higher premiums, improved adjusted underwriting income and higher yields on invested assets, partly offset by higher losses and loss adjustment expenses, as well as underwriting expenses. Palomar incurred higher-than-expected catastrophe loss in the reported quarter.

Behind the Headlines

Total revenues improved 60.3% year over year to $145.8 million, mainly attributable to higher premiums, commission and other income and net investment income. The top line beat the Zacks Consensus Estimate by 8.2%.

Palomar Holdings, Inc. Price, Consensus and EPS Surprise

Palomar Holdings, Inc. price-consensus-eps-surprise-chart | Palomar Holdings, Inc. Quote

Gross written premiums increased 32.2% year over year to $415 million, driven by strength in earthquake and casualty products as well as strong growth from growing crop business. Our estimate was $403.6 million.

Net earned premiums increased 58.1% year over year to $135.6 million. Our estimate was $121.6 million. The Zacks Consensus Estimate is pegged at $126 million.

Net investment income increased 56% year over year to $9.4 million, driven by higher yields on invested assets and a higher average balance of investments held during the three months ended Sept. 30, 2024 due to cash generated from operations. The Zacks Consensus Estimate is pegged at $8.3 million. Our estimate was $7.8 million.

Palomar recorded an adjusted underwriting income of $31 million, which increased 24% from the year-ago quarter. Underwriting income was $26.4 million, up 27.5% year over year. Our estimate was $22.1 million.

Total expenses of $110 million increased 65.6% year over year due to higher losses and loss adjustment expenses, underwriting expenses and acquisition expenses, net of ceding commissions and fronting fees. Our estimate was $110 million.

The loss ratio was 29.7, which deteriorated 1090 basis points (bps) year over year. Our estimate was 26.5. The Zacks Consensus Estimate was pegged at 28.6.

Adjusted combined ratio, excluding catastrophe losses, deteriorated 620 bps year over year to 77.1. The Zacks Consensus Estimate was pegged at 79.

Financial Update

Cash and cash equivalents increased 67% from 2023-end to $86.5 million at the end of the third quarter of 2024. Shareholder equity increased 49% from 2023-end to $703.3 million at the end of the reported quarter.

Annualized adjusted return on equity in the third quarter of 2024 was 21%, contracting 130 bps year over year.

2024 View

Palomar expects adjusted net income in the range of $124-$128 million. This range includes catastrophe losses incurred during the fourth quarter of 2024 of nearly $8 million related to Hurricane Milton.

Zacks Rank

PLMR currently carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Insurers

The Travelers Companies TRV reported third-quarter 2024 core income of $5.24 per share, which beat the Zacks Consensus Estimate by 38.2%. Total revenues increased 10.7% from the year-ago quarter to $11.84 billion, primarily driven by higher premiums, net investment income, fee income and other revenues. The top-line figure beat the Zacks Consensus Estimate by 1.4%.

Travelers’ net written premiums increased 8% year over year to a record $11.31 billion, driven by strong growth across all three segments. The figure was higher than our estimate of $10.5 billion. Travelers witnessed an underwriting gain of $685 million against a loss of $136 million incurred in the year-ago quarter. The consolidated underlying combined ratio of 85.6 improved 500 bps year over year. The combined ratio improved 780 bps year over year to 93.2 due to an improvement in the underlying combined ratio and net favorable prior-year reserve development.

The Progressive Corporation’s PGR third-quarter 2024 earnings per share of $3.97 beat the Zacks Consensus Estimate of $3.40. The bottom line more than doubled year over year. Operating revenues of $19.5 billion improved 24.9% year over year and beat the consensus estimate by 2.6%.

Net premiums written were $19.5 billion in the quarter, up 25% from $15.6 billion a year ago. Combined ratio — the percentage of premiums paid out as claims and expenses — improved 340 bps from the prior-year quarter’s level to 89.

RLI Corp. RLI reported third-quarter 2024 operating earnings of $1.31 per share, beating the Zacks Consensus Estimate by 33.7%. The bottom line more than doubled year over year. Operating revenues for the reported quarter were $426 million, up 1.4% year over year. The top line beat the Zacks Consensus Estimate of $420 million.

Gross premiums written increased 13% year over year to $563.4 million. This uptick can be attributed to the solid performance of the Casualty (up 15.7%), Property (up 9.6%) and Surety segments (up 9%). Our estimate was $572.3 million. Underwriting income increased to $40.7 million from $4.2 million in the year-ago quarter. The combined ratio improved 910 bps year over year to 89.6. The Zacks Consensus Estimate for the metric was pegged at 96, while our estimate was 103.1.

Zacks Investment Research