How to Invest in Assurant Shares (AIZ)

Assurant may not be a household name, but it's a leading provider of niche insurance products. Its offerings include:

• Mobile device insurance.
• Renter's insurance.
• Credit life and disability insurance.
• Credit card travel insurance.
• Lender-placed homeowner insurance.
• Flood insurance.
• Extended warranty contracts for vehicles, home devices, and mobile devices.
• Pre-need funeral insurance.

Since its initial public offering (IPO) in 2004, Assurant has delivered market-smashing performance, with total returns of about 860% as of June 2024, compared to roughly 380% for the S&P 500 index in the same period. It's also been a faithful dividend payer since going public, with 19 consecutive annual dividend increases to its name.

Is it time to add Assurant to your investment portfolio? Read on to learn about how to buy Assurant stock, whether the company is profitable, and the pros and cons of investing.

How to invest

How to buy Assurant stock

Whether you're buying stock in Assurant or any other publicly traded company, here are the four basic steps you need to follow:

1. Open a brokerage account. You'll need a brokerage account to start trading stocks, but fortunately, it's easy to open one online in just a few minutes. You'll be asked to provide some basic info like your name, address, date of birth, and Social Security number. You'll also need to transfer funds before you can buy your first shares.
2. Make a budget. Next, you should calculate how much you want to invest. If you already own a wide mix of stocks or index funds, you could simply decide to put some extra into Assurant stock. But if you're an investing novice, you'll want to determine how much to invest overall and how much of that to allocate toward Assurant. Investing in any one individual stock is risky. You typically don't want any single stock to account for more than 5% to 10% of your overall investments.
3. Do your homework. Be sure you've thoroughly vetted any company before buying its shares. Take some time to get to know the basics of Assurant and the potential risks of investing. Understanding how insurance companies make money and the pros and cons of investing in the industry is also essential.
4. Place an order. If you've determined that Assurant stock is a good fit for your investment strategy, go ahead and place an order. The steps will differ slightly depending on your brokerage, but you'll start by entering Assurant's stock ticker, AIZ. Next, you'll specify the number of shares you want to buy. If your brokerage supports fractional investing, you could enter the dollar value you want to invest instead. You'll also need to indicate whether you're placing a market order vs. limit order. Your broker will execute the order immediately if you choose a market order. However, it will only place the order at a specified price if you opt for a limit order.

Should I invest?

Should I invest in Assurant?

Rarely is a stock the right fit for every investor. Let's discuss some reasons you may want to invest in Assurant, as well as some reasons you might want to steer clear.

Consider investing in Assurant stock if:

• You believe that Assurant can continue to deliver market-beating returns.
• You're seeking reliable dividend income.
• You think that the company's niche offerings provide it with a decent economic moat.
• You believe the company has a well-diversified business that serves a variety of industries.
• You believe that Assurant can continue to expand its mobile device offerings beyond the U.S. and Europe into emerging markets.
• You want to add more exposure to insurance stocks to your portfolio.

You might want to avoid Assurant stock if:

• You're worried about the effects of inflation on the company's business model, since higher prices mean Assurant pays more for things like replacing vehicle parts and mobile devices.
• You're concerned about the company's exposure to severe weather events through its products like flood insurance and renter's insurance.
• You believe Assurant's business is too heavily concentrated in a handful of large clients.
• You're worried that a recession would adversely affect Assurant's business since customers avoid replacing vehicles or devices during tough economic times.

Profitability

Is Assurant profitable?

Yes, Assurant is profitable. The company reported generally accepted accounting principles (GAAP) net income from continuing operations of $642.5 million in fiscal 2023, marking its seventh consecutive year of profitability. Adjusted earnings per share were $17.13, an increase of 26% from 2022.

Assurant's Connected Living division, which offers mobile device insurance and extended warranties for home devices and consumer electronics, grew its revenue by 14% in 2023, thanks in part to growth in its mobile protection offerings in the U.S. The company also extended its partnership with Spectrum Mobile (CHTR 1.65%) to offer upgrades to existing customers and a repair and replacement plan customers can purchase as an add-on.

However, the company's Global Automotive business has struggled with inflation. Assurant provides extended vehicle warranties, which means it's hit hard by higher vehicle replacement part and labor costs. In the first quarter of 2024, adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) for its Global Automotive division dropped by 9%, or $7 million.

Dividends

Does Assurant pay a dividend?

Yes, Assurant has paid a quarterly dividend since 2004 and has increased its payout every year since. The company's most recent quarterly dividend was $0.72 per share, which works out to an annual yield of 1.74%. Assurant has delivered compound annual dividend growth above 14% per year since it started paying dividends 20 years ago.

ETFs

ETFs with exposure to Assurant

If you aren't sure whether you want to buy Assurant shares, you could still get exposure to the company through an exchange-traded fund (ETF). An ETF is a basket of stocks that you can buy with a single purchase. You purchase ETF shares using a brokerage account using the same process for buying individual stocks. Some ETFs with Assurant exposure include:

• SPDR S&P Insurance ETF (KIE -0.58%): The fund invests in 48 insurance stocks in the U.S., with property and casualty insurers representing about half of the fund's holdings. The ETF has a 0.35% expense ratio, meaning you'd pay $3.50 in fees on a $1,000 investment. The fund's concentration in Assurant is 2.07%.
• Invesco S&P 500 Equal Weight Financials ETF (RSP 0.07%): The fund invests in the financial stocks in the S&P 500 index, weighting each of the 73 stocks included equally. Its expense ratio is 0.40%, so $4 of a $1,000 investment would go toward fees.
• iShares U.S. Insurance ETF (IAK -0.96%): The fund invests in 54 insurance stocks and is most heavily concentrated in property and casualty insurance, followed by life and health insurance. Assurant accounts for 1.16% of the fund's value. Its expense ratio is 0.40%, translating to $4 in fees on a $1,000 investment.

Stock splits

Will Assurant stock split?

Assurant has never split its stock in its 20 years as a publicly traded company, and an upcoming stock split does not appear to be on the horizon.

Companies typically split their stocks to make shares seem more affordable, particularly to retail investors. In reality, though, it's more about perception since a stock split doesn't change the value of the company or an investor's holdings. Also, the rise of fractional shares has made it easy to invest in a company without having to buy a full share.

Many companies that have recently split their stock or announced plans for a stock split were trading at more than $1,000 per share. With Assurant shares trading for about $165 per share as of June 2024, it doesn't appear likely that a stock split will occur in the near future.

Related investing topics

The bottom line on Assurant

Assurant has a solid history of market-beating returns, generating profits, and paying dividends to shareholders. The business is well diversified, providing insurance solutions across many different industries.

However, it's important to understand the risks of investing in any individual company. Before you become an investor, make sure you understand Assurant's business model and the risks, such as high inflation and catastrophic weather events.

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