Insurance stocks have the ability to produce long-term returns acting as a potential hedge against inflation. With inflation hitting almost a 40-year high of 8.5% investors may seek to sit on the sidelines, though insurance stocks create revenues in either up or down markets.
Investing titans like Warren Buffett made insurance stocks the backbone of their investment, as the industry is considered to be recession-proof. As things get tough, companies must maintain insurance coverage for their assets which in turn ensures long-term returns for insurers with minimal downside.
Here are three strong insurance stocks with solid dividends from which potential investors could benefit through up and down markets.
Picks for you
Fairfax Financial Holdings Limited (OTCPK: FRFHF)
Fairfax has been going up recently since they reported one of their best earnings report so far. Revenue is up 34% with net earnings up almost 15 times to $3.4 billion, compared to the previous year. Global premiums have been growing by 23% and the company decided to declare a $10 dividend or 1.77%.
The stock performed well to start the year, hitting a low point during early March but has since recovered to trade close to the all-time highs. Volume has been slowly picking up towards the end of March when investors chased the stock higher.
On Wall Street, analysts rate the stock a strong buy predicting that in the next 12-months the average price could hit $630.71 which is 12.63% higher than the current trading price of $560. Bullish analysts predict the stock to reach $792.10, which is over 40% higher than the current point.
Markel Corporation (NYSE: MKL)
One-third of the company’s assets are held in publicly traded stocks, which ensures that Markel has a unique portfolio. With an emphasis on insurance and investments, the Q4 results were stellar. Revenues were $12.8 billion and earnings per share (EPS) of $17.01 beating the estimate by $0.91.
The stock has been trading sideways since 2018 creating a really long sideways channel. However, with new global developments and the company delivering on its promises the stock shot up over 20% from March until today, April 19. The stock is above the 20-50-200-day Simple Moving Averages, so potential investors should scout for a good entry position.
Analysts give the stock a buy rating with the predicted average price slightly below the current trading price. More bullish analysts still see upside to the stock predicting that it may go roughly 18% higher.
AXA (OTCQX: AXAHF, AXAHY)
Axa has over 108 million customers with more than €100 billion in annual revenue and almost €7 billion in underlying earnings for 2021 which represents a 61% increase compared to 2020.
The company is growing with Property&Casual growing at 151% earnings and asset management up 25% year-on-year (YoY). Add to these numbers a solid dividend yield of 5.69% investors may have a great portfolio builder.
The stock started 2022 well dropping suddenly in March when the risk surrounding the war in Ukraine started to increase. Currently, the stock trades around a solid entry range with volumes staying stable offering solid entry points for potential long-term investors.
Analysts give the stock a buy rating agreeing that the next 12-months price could reach $30.5 a potential upside of 4.5% from the current trading price of $28.95.
In times of market volatility investors usually seek safe-heaven stocks or market niches where their hard-earned money can perform whether markets rise or fall. By buying high-yielding stocks market participants can get exposure to an industry that thrives no matter the market conditions.
With solid valuations, the three mentioned stocks could serve as hedges against inflation for investors looking to diversify their portfolios.
Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.
