Insurance policies bring security to holders in case of hardship or tragedy, and insurance stocks bring reassurance for investors in times good and bad.
That’s because major insurers have proven able to provide steady earnings and healthy dividends over the years. That makes their shares attractive, and two stocks to consider are Allstate (ALL) and MetLife (MET).
Allstate, the largest publicly traded U.S. home and auto insurer, raised its quarterly dividend in February for the first time since 2008, to 21 cents a share from 20 cents. That leaves the company with an appealing dividend yield of 2.68 percent as of April 18.
A run of increasing profits for seven straight quarters helped spark the move. “If we don’t have a use for the capital, we give it back to the shareholders,” CEO Thomas Wilson said in a conference call in February before the increase.
Allstate benefits from the fact that it sells its products mostly through its own agents — nearly 13,000 — unlike its competitors, who utilize independent agents.
“ALL appears undervalued based on its trailing-12-month price-sales ratio of 0.54, which is less than the financial sector’s bottom quintile value of 1.19,” write analysts from Ned Davis Research.
MetLife, the biggest U.S. life insurer, reported profit of $2.79 billion last year, reversing a loss of $2.25 billion in 2009.
“During the year, we increased premiums, fees and other revenues and also achieved annualized savings above [our] target,” MetLife CEO Robert Henrikson said in a statement accompanying the company’s latest earnings report.
“These results, combined with our recently completed acquisition of Alico, have positioned MetLife to deliver strong top and bottom line results in 2011.”
The company closed its $16.2 billion purchase of American Life Insurance Co. from American International Group in November. That gives MetLife 20 million new customers in markets all over the world.
MetLife’s group life business is viewed as the company’s prize asset. It counts about 90 percent of the Fortune 100 as its customers.
Last month, analysts at Citigroup raised their price target on MetLife shares to $59 from $54 previously and have a buy rating on the stock. It closed at $43.37 on April 18.
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