We recently compiled a list of the 10 Best Consistent Dividend Stocks To Invest In Right Now. In this article, we are going to take a look at where Chubb Limited (NYSE:CB) stands against the other dividend stocks.
Stocks that pay dividends, especially those backed by strong financial health and attractive yields, offer investors a reliable income stream, protection during market declines, and the potential for steady investment growth. This year, investors have faced a dilemma: stick with their current strategies or shift focus toward the leading technology stocks driving much of the market’s gains. At the same time, many are considering how best to prepare their portfolios for a potential economic slowdown, given uncertainty about the Federal Reserve’s ability to achieve a soft landing. Analysts recommend incorporating dividend stocks into portfolios to better navigate these conditions.
Also read: 8 Magnificent Dividend Growth Stocks to Buy Now
Savita Subramanian, an equity and quant strategist at Bank of America Corp., also advised investors to load up on dividend stocks. Here is what the analyst said:
“You want to be in safe dividends — and I know this is the most boring call of all time, but sometimes boring is good. We believe that we are now in a total return world in which the contribution of dividends to total market returns could be significantly higher than it was in the last decade, a period marked by falling cash yields and lofty price returns. We advise investors to seek out companies with above-market and secure (not stretched) dividend yields.”
Investors have shown growing interest in companies that consistently increase their dividends. This has pushed many firms to prioritize maintaining and growing dividends, even during economic challenges. Such efforts have paid off, as companies with a history of dividend growth have delivered strong long-term returns. A report by Cohen & Steers highlighted this trend, noting that between 2000 and 2010, dividend-paying companies outperformed non-payers by an annual margin of 620 basis points while exhibiting significantly lower risk, as measured by standard deviation. Over a 30-year span ending in 2011, the benefits of dividend-paying firms were even more evident. Among these, companies that initiated or raised dividends within the prior year consistently outperformed both other dividend payers and non-payers, achieving higher returns with reduced volatility.
In addition to offering strong returns, stocks with consistent dividend payouts have become a vital source of personal income. Research from S&P Dow Jones Indices revealed that dividends have steadily grown as a share of personal income over the last four decades. Since Q4 1980, the contribution of dividends to personal income has risen from 2.68% to 7.88% in Q2 2024, while income from interest has declined from 14.58% to 7.61% during the same period. The report also highlighted the impressive growth of dividends among companies in the U.S. Dividend Growers Index. Over the past 15 years, these companies have achieved an average annual dividend growth rate of 13.71%, significantly outpacing the 2.21% average annual growth rate of the US Consumer Price Index (CPI) over the same period.
Dividend stocks are bound to regain their prominence, even though the tech sector has been dominating the spotlight lately. In view of this, we will discuss some of the best consistent dividend stocks to buy.
Our Methodology:
We compiled this list by examining Insider Monkey’s Q3 2024 database and identifying companies that have consistently increased their dividends for a minimum of 15 consecutive years. From this pool, we specifically chose stocks with dividend yields of at least 1% as of December 4. The stocks are ranked in ascending order of the number of hedge funds having stakes in them as of Q3 2024.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points. (see more details here).
A close-up of an insurance agent’s hand pointing to a marine insurance policy, highlighting the company’s expertise in marine coverage.
Chubb Limited (NYSE:CB)
Number of Hedge Fund Holders: 51
Chubb Limited (NYSE:CB) is an American Swiss insurance company that offers a wide range of related products and services to its consumers. In the third quarter of 2024, the company posted net income of $2.32 billion, up 13.8% from the same period last year. The company’s net premiums came in at over $12.2 billion, which showed a 5.4% growth from the prior-year period. Its P&C underwriting results for the quarter were strong, with significant contributions from all divisions, despite a period marked by widespread industry catastrophe losses. The combined ratio stood at 87.7%, and P&C underwriting income saw an increase of over 11.5%.
Insurance stocks stand out for their strong pricing power, regardless of the economic environment. In the wake of catastrophic losses, insurers can justify raising premiums, and even during periods of fewer claims, they can cite the inevitability of future risks to support premium increases. Essentially, insurers operate as steady, profit-generating machines. Chubb Limited (NYSE:CB) is particularly appealing due to its emphasis on high-income customers, especially in its homeowner insurance segment. Wealthier individuals are less likely to alter their spending habits or default on bills and premiums during minor economic downturns, providing greater stability for the company. Since the start of 2024, the stock has surged by over 25.2%.
The London Company made the following comment about CB in its Q3 2024 investor letter:
Initiated: Chubb Limited (NYSE:CB) – CB engages in the provision of commercial and personal property and casualty insurance, personal accident and health (A&H), reinsurance, and life insurance. While the company is headquartered outside the U.S., roughly 2/3 of its profits are generated in the U.S. with Asian markets representing another 20% of earnings. CB has a portfolio of top-performing, multibillion-dollar businesses that have substantial scale and yet potential for growth. CB has a culture of superior underwriting discipline, and management has a strong track record of expense control. CB also has a well-balanced mix of business by customer and product, with extensive distribution channels. We are attracted to CB’s globally diversified business model, superior underwriting and expense management, consistent and best-in-class profitability, upside potential from growth in Asia, and the potential to benefit from higher interest rates in its investment portfolio.
Chubb Limited (NYSE:CB) generated over $4.55 billion in operating cash flow during the quarter. Currently, the company pays a quarterly dividend of $0.91 per share for a dividend yield of 1.28%, as of December 4. It is one of the best dividend stocks on our list with 31 consecutive years of dividend growth under its belt.
Chubb Limited (NYSE:CB) was a popular buy among elite funds at the end of Q3 2024, with hedge fund positions growing to 51, from 46 in the previous quarter, as per Insider Monkey’s database. The stakes owned by these hedge funds have a collective value of over $10 billion. Warren Buffett’s Berkshire Hathaway owned the largest stake in the company.
Overall CB ranks 6th on our list of the best consistent dividend stocks to invest in right now. While we acknowledge the potential of CB as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than CB but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 8 Best Wide Moat Stocks to Buy Now and 30 Most Important AI Stocks According to BlackRock.
Disclosure: None. This article is originally published at Insider Monkey.