Financial Services Sector includes insurance companies, banks, brokerages, mutual funds and other similar companies. Before the 2008-09 financial services meltdown, these stocks were the cornerstone on many income portfolios. The companies were flush with cash, the stocks provided relatively high yields, good dividend growth rates and carried very little perceived risk.
Unfortunately, things are not always as they seem. Under the surface banks were making questionable loans, while investment firms were creating and peddling exotic financial instruments. In effect, their CEO's were building houses of cards in a hurricane - it was destined to come tumbling down, and it did.
As a result, investors learned some very valuable, but expensive lessons. This should serve as a warning when investing in the Financial Services Sector - not a stop sign. Many of these companies are now in very lucrative positions.
With interest rates as low as they are, banks are enjoying decent spreads, not to mention all the new fees they are charging their customers. As more consumers take advantage of electronic banking, we are becoming more tied to our accounts. The pain threshold of changing banks is high, and they know it.
Have you ever filed an insurance claim and were satisfied with the outcome?
Insurance companies are the ultimate business. They charge premiums to protect you. Then take the premiums, invest them and earn a return, which is then reinvested. The money is theirs to keep if you don't file a claim. If you do file a claim, the insurance company will find ways to minimize what they actually pay you - then raise your rates for filing a claim.
You can complain about these companies, or invest in the industry and profit from them. I've chosen the latter.
This week week, I screened my dividend growth stocks database for Financial Services companies with a yield at or above 4% and have increased their dividends for at least 14 consecutive years. The results are presented below:
Mercury General Corp. (MCY)
Yield: 6.2% | Years of Dividend Growth: 24
Mercury General Corp. is an insurance holding company, primarily in California, writes a full line of automobile coverage for all classifications of risk.
Old Republic International (ORI)
Yield: 6.0% | Years of Dividend Growth: 30
Old Republic Intl writes property and liability, mortgage guaranty, title and life, and disability insurance.
Cincinnati Financial Corp. (CINF)
Yield: 5.8% | Years of Dividend Growth: 51
Cincinnati Financial Corp. markets primarily property and casualty coverage. It also conducts life insurance and asset management operations.
People's United Financial Inc. (PBCT)
Yield: 4.6% | Years of Dividend Growth: 14
People's United Financial Inc. provides a full range of banking and financial service products to individuals, corporations, and municipal customers in the U.S. Northeast.
Harleysville Group Inc. (HGIC)
Yield: 4.5% | Years of Dividend Growth: 25
Harleysville Group Inc. underwrites a broad array of personal and commercial coverages. These insurance coverages are marketed primarily in the Eastern and Midwestern United States.
Community Trust Bank Corp. (CTBI)
Yield: 4.3% | Years of Dividend Growth: 31
Community Trust Bank Corp. owns and operates Community Trust Bank, Inc. of Pikeville, KY, which provides commercial banking services in Kentucky and West Virginia; and a trust company.
As with past screens, the data presented above is in its raw form. Some of the the companies would be disqualified for poor dividend fundamentals. However some of the others may be worth additional due diligence.
My database, D4L-Data, is an Open Office spreadsheet containing more than 20 columns of information on the 210+ companies that I track. The data is sortable and has built-in buttons and macros to make it easy to use. Companies included in the list are those that have had a history of dividend growth. The D4L-Data spreadsheet is a part of D4L-Premium Services and is updated each Saturday for subscribers.
Full Disclosure: Long CINF, HGIC. See a list of all my dividend growth holdings here.
- 7 Undervalued, Big-Name Stocks To Consider For Your Dividend Portfolio
- 5 Dividend Stocks In Need Of A Market Correction
- My Top And Bottom Performing Dividend Growth Stocks
- How To Build A Sustainable High Yield Portfolio
- 10 Stocks That Have Paid Dividends Since The 1800s
Tags: [MCY] [ORI] [CINF] [PBCT] [HGIC] [CTBI]
Popular Posts - Last 7 days
Presented below are my dividend stock and ETF/CEF holdings. This is not a recommendation to buy these securities. I have classified some of...
Each Sunday I highlight any notable articles that I came across over the past week, along with any Carnivals I participated in. For those re...
Linked here is a detailed quantitative analysis of ConocoPhillips Co. (COP). Below are some highlights from the above linked analysis: Co...
In the southern U.S. where I live, there has been some controversy over harvesting forests of hardwoods and reseeding them with pines. Valua...
If income investing were as simple as picking the stock with the highest yield, everyone would be an expert. Most assume (rightfully so) tha...
Linked here is a detailed quantitative analysis of Genuine Parts Company (GPC). Below are some highlights from the above linked analysis: ...
We have all heard it… Stodgy, for old people, yawn, boring! These have all been used to describe dividend growth stocks . As a dividend grow...
Monday, October 31, 2011 will mark my fourth full year of writing as Dividends4Life . It is hard to believe another year has passed. Like th...
Like many that came before me, I am on a journey to construct a portfolio that will provide me... Dividends 4 Life
Dividends are not paid with sales, earnings, EPS, EBIT or EBITDA. Instead dividends are paid with cash. As an investor, you want to pay clos...