July 5, 2007, 2:17 am

Protect yourself against market fluctuation, buy insurance company stocks

by: The Financial Blogger    Category: Investment, Market and Risk
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They are big, they are making profit and they are constantly growing. However, they are ignored by investors. Why? What is really exciting about insurance companies when you can buy uranium stocks and expect 50% return and more per year? I may have an answer: stability.


On of their strength, is their dividend. They usually have the good habits of distributing enough dividends to protect your investment from inflation. Most of them offer 2 to 3% dividend yield. There are also several insurance companies that are increasing their dividend from time to time. This means you can end-up by getting a 5% yield on your original investment. This is definitely a good source of passive income.


Another reason why I like insurances companies stocks is because most of them are backed-up by solid balance sheet. Several companies have enough liquid assets to prevent any catastrophe or to prepare an acquisition. Several companies are well established and know their marking inside out.


People do need insurance, now more than ever. Baby boomers are aging and need to protect themselves along with their assets and their health. Therefore, this industry should keep on growing for the following years. This means more profit, bigger dividend and potential capital gain for shareholders.


Since insurance company stocks are ignored by several investors, this is exactly the right time to buy some of them. Don’t get me wrong, they are not all good. The industry in general has good perspectives, not more.


I guess you are probably looking for some tips but I don’t have any for you. I don’t have a crystal ball and don’t know much about the future. However, if I were you, I would check out Manulife Financial and Industrial Alliance. You can study those two stocks and determine if they should be part of your portfolio or not. Good luck with your investments!

Note: Due to Canada Day, I had to wait until tomorrow (or maybe Monday!) to post my July update on my Smith Manoeuvre. Don’t worry, it’s coming!

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