Brown & Brown

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Insurance broker Brown & Brown ( BRO) may get lumped with the rest of the insurance industry, but the firm couldn't be more different. At its core, Brown is a sales business, focused on selling insurance policies that are underwritten by other firms that take the balance sheet risks.

While this business generates less income than a traditional insurance model, investors shouldn't eschew BRO or its 8.5-cent quarterly dividend payout. With strong growth this year, the firm looks like a prime candidate for a hike to its 1.3% yield.

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Brown & Brown is an insurance agency that focuses on small and middle-market customers, groups that most appreciate BRO's service-oriented approach to insurance. While larger client firms with more external expertise may be willing to take a more hands-off (and cheaper) brokerage alternative, small and medium sized clients want more guidance. That leads to sticky customer relationships for Brown, and it's helped to make the firm one of the most profitable insurance brokers in the country.

Brown has been a big proponent of a growth-by-acquisition strategy. While that strategy failed to boost the firm's top line in the last few years, numbers are increasing again this year. That should help to calm any investors who were worried about the trajectory of Brown & Brown's income statement.

With a healthy balance sheet in tow, BRO is positioned to pass a bigger chunk of cash onto investors in the form of dividends.

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