4 Insurance Dividend Stocks With Two Ways to Make Money and Pay Shareholders

Insurers fund dividends in two ways. First is underwriting profit, the piece of premiums left after paying claims and running the business. Second is investment income earned on the premium dollars they hold before claims come due. The measure for the first is the combined ratio, which is claims plus expenses divided by premiums.

Anything under 100% means the policies themselves made money, and that profit can go to shareholders without dipping into reserves. These four Nasdaq-listed insurers pay you that way, led by a company that just announced its 13th consecutive annual increase. A name on this list is still rebuilding its premium engine, and we say so simply below.

Selective Insurance Group: 13 Straight Annual Raises Backed by Underwriting Profit

Selective Insurance Group (NASDAQ:SIGI | SIGI Price Prediction) shows a trailing dividend yield of 1.71%. The new quarterly rate of $0.48, up 12%, works out to roughly 1.88% on a forward basis at the current price of $102.27.

Dividend safety: Trailing dividends of $1.72 versus earnings of $8.32 put the payout ratio near 21%. That sits right inside management’s goal of returning 20%-25% of earnings through regular dividends. The third-quarter GAAP combined ratio came in at 96.8%, up 1.8 points from a year ago, and that figure already includes 5.4 points of catastrophe losses. After-tax net investment income rose 16% to $127.3 million, and full-year guidance moved up to $490 million. It has $3.4 billion of GAAP equity and $3.7 billion of statutory surplus. Dividend history backs up the streak: the quarterly payout rose every year from $0.13 in 2014 to today’s $0.48.

Bull case: Selective is cutting weak business on purpose. Retention in its lowest-performing commercial groups fell to 52%, down from 79% a year ago, while its best groups held at 90%. As the CEO summed it up: “We are prioritizing improved underwriting returns over volume.” Add about $253 million of buyback capacity and a forward P/E of 11, and income investors get a steady compounder at a reasonable multiple.

Risk: Standard Personal Lines still ran a 103.2% combined ratio, so that segment loses money on underwriting even after improving from 112.5%.

Palomar Holdings: A Brand-New Dividend From a 33% ROE Underwriter

Palomar Holdings (NASDAQ:PLMR) shows a trailing yield of just 0.29%, but that number counts only the first payment. At the $0.45 quarterly rate, the forward yield is about 1.14% at $158.29.

Dividend safety: A full year of payments against trailing earnings of $8.20 per share implies a payout ratio around 22%. The third-quarter adjusted combined ratio was 76%, which means Palomar kept roughly a quarter of every premium dollar as underwriting profit. Adjusted underwriting income rose 52.6% to $86.5 million. Annualized adjusted ROE reached 33.1%, and management raised full-year adjusted net income guidance for the fourth time to $280 million to $285 million. Stockholders’ equity stands at $985 million. The track record is short: the first dividend was paid in September, and a second is due December 2.

Bull case: Gross written premiums rose 28.4% to $767.0 million. Crop plus surety, lines that move less with the property cycle, made up more than 36% of the quarter’s premium. Catastrophe exposure, mainly earthquake and Hawaii hurricane risk, stayed contained, with third-quarter cat losses of $4.5 million against a full-year guide of $8 to $12 million. The CFO discussed the dividend. He called it affordable: “Repurchases and dividends represent an attractive use of capital given the strength of our operating performance, earnings outlook, and long-term growth opportunities.”

Risk: The loss ratio rose to 41.5% from 32.3% as crop grew, and crop also produced $4.0 million of adverse prior-year development.

International General Insurance: Small Base Dividend, Big Special Payouts

International General Insurance (NASDAQ:IGIC) lists a yield of 1.61%. The regular $0.075 quarterly payment alone works out to about 1.28% at $23.42. Add the $1.15 special from this spring and the regular payments over the past 12 months, and the trailing yield reaches roughly 5.98%. That puts IGIC in high-yield territory, as long as you accept that the special amount changes every year.

Dividend safety: Dividends of $0.375 versus earnings of $2.41 put the payout ratio near 16%. The third-quarter combined ratio was 85.7%, and the nine-month figure of 90.1% includes 14.8 points of catastrophe losses, mostly tied to the Middle East war. Third-quarter return on equity hit 16.9%, and the company returned close to $80 million through dividends and buybacks over nine months. The base payout has grown steadily, from $0.01 in 2022 and 2023 to $0.025, then $0.05, and now $0.075.

Bull case: IGIC writes around 25 lines of business out of nine offices worldwide, so a weak line in one region can be offset elsewhere. It trades at a forward P/E of 8 with a book value of $15.99 per share, and it is buying back stock at an average of $24.37. The CEO’s line on discipline: “We do not, and we will not compromise these under pressure.”

Risk: Pricing is moderating. Commercial property rates are falling about 15%. The CEO said he does not see the market “changing its tone or tune in any meaningful way, at least not yet.”

Tiptree: Cash-Rich Transition Play Rebuilding Its Premium Engine

Tiptree (NASDAQ:TIPT) yields 1.36%, and the $0.06 quarterly rate implies about 1.37% at $17.54. This is the transition name in the group. After the $1.65 billion sale of Fortegra, the dividend comes from investment income on cash and securities. Premium income returns once the pending insurance acquisition closes.

Dividend safety: Trailing earnings are negative at -$0.49 per share, so a payout ratio tells you nothing here. Its finances tell you plenty: $198.3 million in cash, $589.6 million in marketable securities, and only $42.3 million of total liabilities against $902.5 million of equity. Long-term debt was eliminated. Other income of $11.06 million raised third-quarter pre-tax income from continuing operations to $5.06 million. The company has paid $0.06 per share every quarter since early 2024, up from $0.025 in 2015, plus an extra $0.25 dividend in late 2024.

Bull case: Shares trade at 0.713 times book value of $24.47 per share, and management has bought back $25.0 million of stock this year at an average 30% discount to book. The $100 million cash purchase of Universal Shield Insurance Group, a specialty P&C carrier licensed in 49 states, brings premiums back. Executive Chairman Michael Barnes said, “USIG provides Tiptree with a new foundation in the specialty insurance sector and a clear path for scalable growth.”

Risk: Revenue from continuing operations is $0 until the deal closes, expected in Q1 2027 and still subject to regulatory approval.

Premium-Funded Income With Room to Grow

Selective and Palomar pay dividends out of combined ratios below 100% while paying out only about a fifth of earnings, leaving plenty of room for future raises. IGIC adds catastrophe-tested underwriting and large special payouts on top of a growing base dividend. Tiptree is the cash story, a cash-heavy company trading below book while it buys back its insurance engine. In each case, the payout is backed by real earnings power or real cash, which is what income investors should want from an insurer (and the whole appeal of living off the checks without selling shares is the setup our free dividend ladder guide walks through here: Never Touch the Principal).

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