If you’re looking for steady returns, long-term capital appreciation and a decent dividend income, consider investing in insurance stocks. Insurance companies offer some unique and valuable advantages that make them a great choice for conservative, growth-oriented equity investors.
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The business model of the insurance industry involves collecting premiums from customers upfront. Some policyholders will never file a claim, others will file only small, insignificant claims. The result is that insurance companies often have surplus funds on hand to invest for the benefit of the company and its shareholders. A reliable stream of premium and investment income contributes to high cash flow and profits year after year.
Consistent revenue also means that many insurance companies can afford to pay high dividends regularly. This makes insurance company stocks particularly attractive to income-oriented investors.
Regardless of what the economy or the stock market is doing at any given time, people will still need life, health, auto, home and property insurance. Most forms of insurance are a necessity, not a luxury. The more or less constant demand for insurance helps insulate insurance company stocks from the worst effects of a downturn or bear market. That’s why insurance companies are often considered more resilient and more stable than many other businesses.
Another important thing to consider is that the insurance industry is highly regulated. Every state has its own insurance commission that makes sure insurers have adequate reserves, maintain financial stability and operate transparently. Regulation is not a guarantee of financial soundness but, in most cases, it does reduce the risk of sudden, unexpected financial trouble.
If you agree that insurance stocks are a compelling investment choice, here are seven insurance stocks to buy for current income and growth over time:
| Insurance Stock | Trailing Dividend Yield* |
| Lincoln National Corp. (ticker: LNC) | 5.8% |
| Prudential Financial Inc. (PRU) | 4.5% |
| Manulife Financial Corp. (MFC) | 4.4% |
| The Allstate Corp. (ALL) | 2.0% |
| Principal Financial Group Inc. (PFG) | 3.5% |
| MetLife Inc. (MET) | 2.9% |
| Unum Group (UNM) | 2.8% |
*As of Aug. 22 close.
Lincoln National Corp. (LNC)
Pennsylvania-based LNC is a $5 billion insurance and financial services firm that offers life insurance, investment services and retirement plans to customers in all 50 states.
The company is known for paying a solid, regular dividend, making it an attractive option for investors with current income as a primary or secondary goal.
The company has a good reputation with consumers, insurance regulators and on Wall Street. LNC is considered a reliable and financially stable company. This is important to stock buyers looking for a long-term, dividend-paying investment.
The company is expected to generate $18.4 billion in revenue in 2024 and a little over $19 billion in 2024. The investment banking firm Jefferies upgraded LNC from “hold” to “buy” on May 22, and it reiterated that rating in a research note on June 28.
12-month dividend yield: 5.8%
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Prudential Financial Inc. (PRU)
PRU is an insurance and financial services firm with a market cap of about $42 billion. The company, which is based in Newark, New Jersey, has a storied history that dates back to 1875. Over the 149 years PRU has been in business, it’s built a solid and well-deserved reputation for protecting the financial well-being of its customers and helping people around the globe save for retirement and other important financial goals.
The stock offers a compelling forward annual dividend of $5.20 a share, which is paid quarterly. If you’re looking for a steady and growing income, you should find PRU quite attractive. PRU has raised its annual dividend every year for 16 consecutive years.
The company’s diverse and varied product line, which includes insurance, annuities and mutual funds, plus its extensive industry experience make PRU a smart choice for investors looking for income and growth potential.
12-month dividend yield: 4.5%
Manulife Financial Corp. (MFC)
MFC is a $46 billion, international financial services firm that specializes in providing insurance and retirement solutions to individuals and institutions. The company was established in 1887 in Toronto as The Manufacturers Life Insurance Company. MFC still has its headquarters in Toronto, but it changed its name to Manulife Financial in 1999 as the company grew, expanded its product line and increased its menu of services.
Investors are attracted to the stock’s high, dependable dividend, its track record of success and the financial strength the company demonstrates. Its millions of policyholders and retirement planning customers in the U.S. and Canada appreciate its commitment to customer service.
John Hancock Insurance may be the most well-known brand in the MFC portfolio, but that iconic company accounts for only about a third of the company’s business. MFC is a major player in the financial sector and is one of the largest financial services groups in the world.
TD Securities — the capital markets and investment banking division of TD Bank Group — has a “buy” rating on the stock, which it reiterated in a research report published on June 28.
12-month dividend yield: 4.4%
The Allstate Corp. (ALL)
With a market cap of close to $48 billion, ALL is one of the largest publicly traded insurance companies in the U.S. ALL is based in Northbrook, Illinois, just outside of Chicago.
The company may be best known today for its auto, home and casualty insurance, but it has a strong presence in the life insurance segment and offers annuities, investment products and retirement planning as well.
ALL was established in 1931 as a financial subsidiary of famous retail giant Sears, Roebuck & Co., but it was spun off and became a separate, publicly traded entity in 1993. Sears declared bankruptcy and was delisted in 2018, but ALL is going strong.
Wall Street is looking for close to 11% year-over-year revenue growth from ALL. Revenue is estimated to be a little over $52 billion in 2024 and is expected to top $62 billion in 2025.
12-month dividend yield: 2%
Principal Financial Group Inc. (PFG)
PFG is a leading financial services company founded in Des Moines, Iowa in 1879. This 145-year-old insurance company has a market cap of just over $18 billion and serves customers in 80 countries, mostly in the U.S., Latin America, the U.K., China and India.
The company has a wide range of products and services. Individual customers can take advantage of its life insurance and asset management offerings, while corporations can utilize its group insurance and retirement plan administration products.
Wall Street consensus revenue estimates for PFG are $15.8 billion in 2024 and $16.8 billion in 2025. That’s a growth rate of about 6% and is more than enough revenue for the company to maintain its annual forward dividend of $2.88 a share.
12-month dividend yield: 3.5%
MetLife Inc. (MET)
MET is a well-known and well-respected provider of many types of insurance, a wide range of employee benefits, and an impressive suite of retail financial products and services. This New York-based company has been in business since 1868 and has a current market cap of $18 billion.
MET takes a dual approach to marketing and distributing its products. This means that, in addition to its own licensed MetLife agents, it also sells through an extensive, international network of brokers and financial professionals. This greatly enhances MetLife’s distribution efforts and allows it to effectively meet the needs of individual and corporate clients around the world.
This $52 billion company’s solid reputation, global footprint, loyal customer base and diverse product offerings will all contribute to MET generating an estimated $73 billion in 2024 and $76 billion in 2025.
MET pays out its $2.18 forward annual dividend quarterly, and it has increased its dividend for 11 consecutive years.
12-month dividend yield: 2.9%
Unum Group (UNM)
The last company on this list is also the oldest. UNM was founded in 1848 in Chattanooga, Tennessee. This $10 billion company is a leading provider of accident, disability and life insurance.
UNM has millions of clients, mainly in the U.S. and the U.K. Its products are primarily distributed through corporate clients, who offer them to their employees as sponsored benefits.
Wall Street analysts are looking for slow but steady earnings growth from UNM over the next year. The consensus earnings per share estimate for 2024 is $8.50 and $8.96 for 2025.
Jefferies, Citigroup and Truist Securities all have a “buy” rating for UNM stock. Income investors will be further encouraged by the fact that the company has increased its dividend — which currently stands at $1.68 a year — for 16 consecutive years.
12-month dividend yield: 2.8%
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7 Insurance Stocks to Buy for Income and Growth originally appeared on usnews.com
Update 08/23/24: This story was previously published at an earlier date and has been updated with new information.
