This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Three Unloved Dividend-Paying Stocks

1. Universal Insurance Holdings (UVE - Get Report) is a Florida-focused home insurer.

Writing policies in the Sunshine State is a risky endeavor, with hurricane season presenting unique geographic risks. Still, the company has proven its underwriting aptitude, helped by its small stature and regional expertise. Of the 145 insurance stocks evaluated by's quantitative equity model, only 45 are rated "buy." Universal Insurance Holdings sits near the top of the list, but that doesn't mean it's risk-free.

Third-quarter net income soared 56% to $12 million, and earnings per share jumped 47% to 28 cents. Revenue grew 16% to $55 million. The company's net margin widened from 16% to 21%. Its balance sheet appears well-managed, with $275 million of cash and $45 million in debt. But our insurance model, which takes a more holistic view of the business, gives the company a financial-strength grade of E-plus, implying the quality of assets is low and potential risk is great.

Still, management raised the year-end dividend to 20 cents, giving the stock an eye-catching 14% yield, assuming dividend retention. Its payout ratio is excessive at 120%. Universal Insurance sells at a price-to-earnings ratio of 5.9 and a price-to-cash flow ratio of 3.8. But the shares are expensive relative to insurance peers when considering book value, a metric often used to determine the cost of insurance stocks. A beta of 3.8 and volatility score of 3.5 reflect extreme price swings. Income-oriented investors who can stomach volatility should take a closer look.

-- Reported by Jake Lynch in Boston, and L.A. Little in Colorado, who provided the charts.

3 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DRYS $0.73 0.00%
ISH $11.77 0.00%
MO $52.07 0.00%
PM $82.75 0.00%
SB $3.81 0.00%


DOW 18,080.14 +21.45 0.12%
S&P 500 2,117.69 +4.76 0.23%
NASDAQ 5,092.0850 +36.0220 0.71%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs