High-yield Play on Hartford

02/17/2016 7:00 am EST


Benjamin Shepherd

Analyst, Breakthrough Tech Profits, Global Income Edge and Personal Finance

Our latest featured recommendation is a property insurer that currently scores a perfect 10 on our proprietary IDEAL rating system, explains Benjamin Shepherd, in Personal Finance.

Hartford Financial Services Group (HIG), in existence since 1810, offers a range of coverage, group benefits, and a lineup of mutual funds.

A partnership with AARP helps Hartford tap into the growing market of retirees, many of who need more of the company’s products.

Hartford ran into trouble during the financial crisis with its life insurance and annuities business; it has since sold or is eliminating those businesses and its margins are now improving.

Over the past three years, its operating income averaged 94.7% growth, with earnings per share increasing nearly 10%.

The company’s common shares only yield 2%, whereas we typically prefer a yield of 3% or better for our portfolio holdings.

But it does have an exchange-traded debenture yielding 6.4%, Hartford Financial Services Group 7.875% of 04/15/42 (CUSIP: 416518504).

The debenture pays quarterly interest on the 15th of January, April, July, and October and is currently rated BBB- by Standard & Poor’s.

With a $25 principal value, the debenture’s price has been rising as Hartford closes the books on the financial crisis and as low interest rates make the company’s payouts more attractive.

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