People often forget that Berkshire Hathaway is technically an insurance stock. But there’s a reason why Warren Buffett loves the industry. It allows him to play with other people’s money and generate plenty of interest off the float. For dividend investors, this float and the healthy returns it produces can lead to plenty of dividend income. Just ask investors in our latest Best Dividend Capture Pick and its hefty 2.11% yield.
You can check out the Best Dividend Capture Stocks List to explore all the stocks.
Our pick is a powerhouse in the industry, operating in over 80 countries and covering a wide range of insurance needs. This includes everything from bread & butter term life insurance to specialty insurance and reinsurance operations. This multi-line approach to the insurance industry allows our pick to generate a wide range of premiums and creates diversification to its cash flows. And as such, it’s able to use that cash to generate some decent float premiums to pay investors.
Our firm has continued to grow as well. The secret is our pick’s turnaround story. After getting into trouble during the Great Recession, our pick has remade itself by spinning off divisions, selling underperforming and high-risk business lines, and focusing on higher-margined specialty insurance. The result is our pick has gotten back on the right footing. This has allowed it to start paying a dividend again and, more importantly, start growing that payout.
With that, investors have once again returned to our pick in spades and it’s become a great 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, December 16, our pick is primed for the strategy, as is evident from its historical track record of a recovery period within an average of 1.8 days after going ex-dividend.
For investors looking for a quick total return of income and capital appreciation, our insurance pick could be a lucrative option.
