Warren Buffett loves the insurance industry for one reason: it provides him with plenty of cash to “play” with. This float can be a top tool for additional gains and continued growth. In the case of our latest Best Dividend Protection Stocks Model Portfolio, its huge size and scope provide plenty of cash for investment.
Our pick is one of the largest underwriters of both property and casualty insurance in the U.S. Businesses and consumers turn to our pick to help protect a variety of needs. Its huge size and scope provide our pick with an ample float from which to boost profits further, while new sources and complexities of underwriting have boosted its margins.
Aside from new forays into more complex insurance lines, our pick has continued to use M&A to add bolt-on businesses both in the United Kingdom and here at home. Additionally, rising rates provide an extra boost to its portfolio of bonds and other cash-like assets, providing an inflation-protected base to its earnings.
With a conservative growth mindset, our insurance pick is a great selection for older and more risk-averse investors. Watch for when the stock goes ex-dividend on Thursday, June 9.
You can check out the Best Dividend Protection Stocks Model Portfolio to explore all the stocks.
