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Income investors looking for quality businesses for long-term dividend growth should consider insurance stocks. Insurance companies have an attractive business model. Insurers collect premium income on the policies they underwrite, and also make money by investing the large sums of accumulated premiums that have not been paid out as claims.

Due to this, many insurance stocks can be found on the various lists of long-term dividend growth stocks such as the Dividend Aristocrats and Dividend Kings.

The following 3 insurance stocks have solid dividend yields and long-term dividend growth potential.

Allstate Corporation (ALL)

Allstate Corporation is an insurance company that offers property and casualty insurance to its customers. The company also sells life, accident, and health insurance products. Its segments include Allstate Protection, Service Businesses, Allstate Life, Allstate Benefits, Allstate Annuities, etc. Allstate’s insurance brands include Allstate, Encompass, and Esurance.

Allstate Corporation reported second-quarter 2023 results on August 1st, 2023, for the period ending June 30th, 2023. The company reported consolidated revenues of $13.98 billion for the quarter, a 14.4% year-over-year increase. Property and casualty insurance premiums totaled $12.5 billion, up 9.8% from $11.4 billion in the same period a year ago. Total policies in force increased slightly year-over-year, from 187.7 million to 180.0 million, a 0.2% increase.

The dividend payout ratio is quite low at approximately 40%. The risk of another dividend cut during the next couple of years is relatively low. ALL shares yield 3.3%.

Aflac Inc. (AFL)

Aflac Inc., founded in 1955, is the world’s largest underwriter of supplemental cancer insurance. The diversified insurance corporation also provides accident, short-term disability, critical illness, dental, vision, and life insurance. Aflac has increased its dividend for 41 consecutive years, placing it on the Dividend Aristocrats list.

On August 1st, 2023, Aflac announced second quarter results for the period ending June 30th, 2023. For the quarter, the company reported $5.17 billion in revenue, a 2.8% decline compared to Q2 of 2022. However, revenue was $700 million higher than expected. On an adjusted basis, earnings-per-share equaled $1.58 versus $2.16 in the year-ago period. Adjusted book value increased 11.5% to $46.61 per share.

Share buybacks will also boost Aflac’s earnings-per-share growth. Aflac repurchased 10.5 million shares at an average price of $66.67 during the most recent quarter. The company has 95.8 million shares, or 16% of its outstanding share count, remaining on its repurchase authorization.

The dividend payout ratio is expected to be just under 30% for 2023, which indicates a safe dividend. AFL stock currently yields 2.2%.

Cincinnati Financial (CINF)

Cincinnati Financial is an insurance company founded in 1950. It offers business, home, auto insurance, and financial products, including life insurance, annuities, property, and casualty insurance. CINF has increased its dividend for 63 consecutive years, making it a Dividend King.

 On July 27th, 2023, Cincinnati Financial reported the second quarter results for Fiscal Year (FY)2023. The company recorded a net income of $534 million, equating to $3.38 per share. This represents a significant improvement from the net loss of $818 million, or $5.12 per share, reported in the second quarter of 2022.

The non-GAAP operating income for the second quarter of 2023 witnessed a robust increase of $97 million or 103%, reaching $191 million, or $1.21 per share. This marks a notable progression from the $94 million, or 59 cents per share, recorded during the same period last year.

Book value per share stood at $70.33 as of June 30, 2023, indicating an upswing of $3.12 since the year's commencement. An encouraging value creation ratio of 7.2% for the first half of 2023 further underscores the company's positive trajectory, especially when juxtaposed with the negative 17.2% figure reported for the corresponding period in 2022.

With its dividend record during the financial crisis, BBB+ investment-grade credit rating, and Cincinnati Financial having over 60 consecutive years of annual dividend increases, we believe that the risk of a dividend cut is low with this company. CINF shares yield 3%.

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