On Dec 23, 2014, shares of American Equity Investment Life Holding Co. (AEL) scaled a 52-week high of $28.95 buoyed by a host of positive factors. About 0.7 million shares exchanged hands in the last trading session and the stock gained 0.5% to close at $28.61.
The year-to-date return from the stock came in at 14.99%, which was ahead of the S&P’s return of 14.50%.
American Equity has always deployed capital to enhance its shareholders’ value. In November, the board of directors approved an 11% increase in its annual dividend. It has increased its dividend each year with this year being no exception. Its dividend has increased at a 5-year CAGR of 8.7%.
In the third reported quarter of 2014, American Equity delivered operating earnings of 81 cents per share that outperformed the Zacks Consensus Estimate by 62% and improved year over year by a penny. Sales in the quarter increased 2% year over year.
Net investment income increased as average yield on invested assets showed improvement.
On the other hand, total benefits and expenses lowered 28% largely due to less interest expenses, decrease in insurance policy benefits, and change in future policy benefits and amortization of deferred policy acquisition costs.
American Equity also scores strongly with the credit rating agencies. Standard & Poor’s affirmed its positive outlook as the company successfully reduced its debt leverage and lowered its adjusted debt to capital ratio to below 20%.
These positives prompted the Zacks Consensus Estimate for this Zacks Rank #1 (Strong Buy) company to move north for 2014 and 2015 as most of the estimated were revised higher in the last 60 days. The Zacks Consensus Estimate increased 16% to $2.29 for 2014 and 6% to $2.33 for 2015.
Stocks to Consider
Investors interested in life insurers may also look at China Life Insurance Co. Ltd. (LFC), Lincoln National Corp. (LNC) and Protective Life Corp. (PL). While China Life shares the Zacks Rank with American Equity, Lincoln National and Protective Life carry a Zacks Rank #2 (Buy).
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