Generally speaking, life insurance companies have the sixth highest dividend yield of any sector and, unlike other high yielding sectors (think telecoms), they count on a high dividend cover and a low payout ratio. With interest rates poised to raise in 2014, this could be a good moment to start looking at life insurance companies a possible investment idea — higher bond yields and steeper yield curves are a positive for life companies.
Besides, life insurance companies trade at similar multiples of book value to banks but, on average, they offer superior returns on equity as well as lower regulatory, political and taxation risks. On top of all what was just mentioned, earnings revisions remain very strong but overall analyst's sentiment towards the sector is not yet as positive as It should be expected. Here I take a look at Metlife (MET), which one of the many American insurance companies that should largely benefit from rising bond yields into 2014. Continue Reading »