3 Income Ideas For Contrarians

That drove the company’s underwriting profit higher: in 2020, Allstate was able to keep 21 cents on every dollar of the premiums it collected after it paid its claims and its own administrative expenses, way up from 15 cents in 2019. That amounted to an excellent “combined ratio” of 79.1. The company also benefits as long-term rates rise because insurers invest the premiums they collect in, among other things, government and corporate bonds. And yields on those bonds rise with Treasury yields.

Allstate also does a terrific job of handing its profits to investors, both through share buybacks (it’s repurchased 42% of its shares in the last decade) and a surging dividend, including the huge 50% payout increase the company announced on Feb. 23. Both of those moves are helping drive the stock price higher.

all dividend

Yet despite all that, Allstate is still well off its 2020 high, as you can see above. And when you add in the firm’s bargain forward P/E ratio of just 9, the opportunity here becomes clearer still.

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