While the housing market’s struggles have been headline staples for the last year or so, it still has plenty of triumphs as well. Digging into the market, some firms have continued to realize good times amid the current downturn. That includes our last Best Dividend Capture Pick. Thanks to its strong housing-related niche, it’s continued to see rising cash flow and profits , enough to boost its dividend by 12%!
You can check out the Best Dividend Capture Stocks List to explore all the stocks.
Our firm’s niche is the insurance industry. Created during the housing crash, our firm provides various insurance products to the housing industry. This includes private mortgage insurance as well as other reinsurance and risk management products to lenders. Given the current climate and risks, mortgage insurance is seen as a must-have for many borrowers, mandated by their mortgage terms. Moreover, many banks and lenders are looking to reduce default risks further. That’s where our pick has found a foothold, increasing its demand and profits.
Our pick has also found growth as well. The firm has continued to expand into tangential products, such as title and settlement services for deeds and properties. These state government-mandated services are requirements for any housing transaction. This cross-selling has continued to add profits to its bottom line. Meanwhile, rising next interest margins have boosted its float portfolio, while strong underwriting has continued to boost profits as well.
The combination of its must-have housing niche and strong premium/float profile produces plenty of cash flows. This has made our pick 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 Tuesday, March 12, our pick is primed for the strategy, as is evident from its historical track record of a recovery period within an average of 5.5 days after going ex-dividend.
For investors looking for a quick total return of income and capital appreciation, our latest insurance stock could be a lucrative option.
