American Financial Group: An Insurance Powerhouse With An Attractive Yield

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American Financial Group Inc. is an insurance holding company that is engaged in property and casualty insurance, focusing on specialized commercial products for businesses. The company has a couple of elements that could be considered competitive advantages, notes Ben Reynolds, editor of Sure Dividend.

On Feb. 3, American Financial Group released its financial results for the fourth quarter. The company’s total revenue decreased by 4% over the year-ago period to $2.06 billion. Slightly lower net earned premiums and net investment income contributed to this modest top-line decline during the quarter.

But the company’s core net operating earnings per share jumped 17% year-over-year to $3.65. This topped the analyst consensus by $0.34. On the same day, American Financial Group also declared a $1.50 special dividend per share. This was paid on Feb. 25.

As for its competitiveness, the company has been in business for more than a century and a half. This reputation alone is enough to attract many new customers. American Financial Group’s specialized insurance product offerings also draw in new customers and allow the company to keep them. The necessity of the company’s products has allowed it to report overall renewal rate increases for 38 consecutive quarters.

American Financial Group is also a financially healthy business. The company enjoys a BBB+ credit rating from S&P with a stable outlook. The company's dividend is well-covered, too, with the payout ratio set to be in the low-30% range for 2026. We think this gives it room to grow the dividend at a faster rate than core net operating EPS growth for the foreseeable future.

American Financial Group stock trades for a P/E of around 11.7, compared with our fair value estimate of 12.5. Multiple expansion could boost shareholder returns by 1.4% per year. Combined with expected EPS growth of 9% and the 2.7% dividend yield, total returns could reach 12.8% per year over the next five years.

About the Author

Ben Reynolds is the CEO and founder of Sure Dividend. Sure Dividend helps individual investors build high-quality growth stock portfolios for rising passive income over the long run. Sure Dividend analyzes 600+ income securities to find the best dividend growth stocks for the long run. His work has appeared on Forbes, MSN Money, The Street, and other leading financial sites.