For dividend and income seekers, the insurance industry has long been a happy hunting ground. By nature, the business model generates plenty of cash flows and interest as premiums wait to be paid out. This float can be successfully used to generate even more cash, benefiting investors and companies alike. For insurance stocks, like our latest Best Dividend Capture Pick, the model is a recipe for success.
You can check out the Best Dividend Capture Stocks List to explore all the stocks.
The key to our pick’s strong cash flow profile has been its must-have, but hardly ever used niche. Our selection’s primary business is providing private mortgage insurance. Many banks and federal agency lenders require homeowners to pay for private mortgage insurance until they hit a certain amount of equity in their home. If they default, the bank or federal entity backing the loan will be made whole, or at least provide some payment for their efforts. The win for our pick is that most homeowners will never use this insurance.
The win for our pick is that this creates a steady, cash-flow-heavy business that also generates plenty of underwriting profits. All of which lends itself to dividends for its investors.
Our pick has continued to find growth as well. As a recent spin-off, our pick has moved away from its former parent, grabbing new business and expanding its role within the industry. Moreover, the firm has embraced technology in its underwriting process and customer relationship management to streamline processes. Finally, gains across the boda and stock market have improved their reverses.
All in all, our pick’s insurance niche and must-have nature generate plenty of stable cash flows. Those cash flows have turned into substantial dividends, and as such, our pick has also become an excellent dividend capture play. A dividend capture strategy involves buying a stock before its ex-dividend date and then selling it after it has recovered the payout. With an ex-dividend date of Monday, August 18, our pick is primed for the strategy, as is evident from its historical track record of a recovery period within an average of 3.1 days after going ex-dividend.
For investors looking for a quick total return of income and capital appreciation, our latest insurance pick could be a lucrative option.
