Up to date on January twenty seventh, 2025 by Bob Ciura
Every year, we individually overview every of the Dividend Aristocrats, a gaggle of 69 shares within the S&P 500 Index that has raised their dividends for no less than 25 consecutive years.
To make it on the listing of Dividend Aristocrats, an organization should possess a worthwhile enterprise mannequin with a helpful model, world aggressive benefits, and the power to face up to recessions.
This is the reason Dividend Aristocrats can proceed elevating dividends in tough years.
With this in thoughts, we’ve created an inventory of all 69 Dividend Aristocrats.
You may obtain your free copy of the Dividend Aristocrats listing, together with necessary monetary metrics reminiscent of price-to-earnings ratios and dividend yields, by clicking on the hyperlink under:
Disclaimer: Certain Dividend is just not affiliated with S&P International in any method. S&P International owns and maintains The Dividend Aristocrats Index. The knowledge on this article and downloadable spreadsheet is predicated on Certain Dividend’s personal overview, abstract, and evaluation of the S&P 500 Dividend Aristocrats ETF (NOBL) and different sources, and is supposed to assist particular person buyers higher perceive this ETF and the index upon which it’s based mostly. Not one of the data on this article or spreadsheet is official knowledge from S&P International. Seek the advice of S&P International for official data.
Erie Indemnity Firm (ERIE) is among the many new additions to the Dividend Aristocrats listing for 2025.
This text will look at Erie’s enterprise mannequin, development prospects, and whether or not we’re at the moment ranking the inventory as a purchase, promote, or maintain.
Enterprise Overview
Erie Indemnity is an Erie, Pennsylvania-based insurance coverage firm. It has established itself in life insurance coverage, auto, dwelling, and industrial insurance coverage. The corporate’s historical past dates to the Twenties.
Erie Indemnity reported its third quarter earnings outcomes on October 31. Revenues totaled $999 million in the course of the quarter, which was 16% greater than the identical quarter the earlier yr.
Income development was pushed by greater administration payment revenues (for coverage issuance and renewal companies) to a big diploma, which rose by 19% yr over yr. Administrative companies payment income grew 6%.
Funding revenue was up considerably on a year-over-year foundation in the course of the quarter, which will be defined by tailwinds from greater rates of interest.
Erie Indemnity generated GAAP earnings-per-share of $3.06 in the course of the third quarter, which was up by 20% year-over-year.
The present estimate for this yr’s earnings-per-share is $11.50, which might be the most effective yr in Erie Indemnity’s historical past.
Progress Prospects
Erie elevated its earnings-per-share by 11% yearly between 2014 and 2023. Like different insurance coverage corporations, Erie Indemnity has a large float – money that it has obtained via premiums and that it wants to take a position.
The corporate’s monetary outcomes are depending on market charges, reminiscent of treasuries.
With rates of interest rising within the current previous, Erie Indemnity skilled an enormous revenue improve in 2023, and one other massive improve is predicted for the present yr.
Lately, Erie Indemnity has achieved interesting income development, and we consider that revenues ought to develop within the foreseeable future. We consider that Erie Indemnity ought to be capable of develop its earnings at a mid-single-digit tempo all through the approaching years.
Rising revenues are one development driver, whereas additional will increase in funding revenue might have a optimistic affect on the corporate’s revenue development as nicely.
We anticipate Erie to develop its earnings-per-share by 5%-6% per yr over the subsequent 5 years.
Aggressive Benefits & Recession Efficiency
Erie Indemnity is just not an enormous insurance coverage firm, in relation to its friends. Subsequently, it doesn’t have any main scale benefits over its rivals.
Nevertheless it was, in comparison with many different insurance coverage corporations and monetary companies, comparatively steady in the course of the Nice Recession, which is a optimistic from a threat perspective.
Its earnings took successful, however the firm managed to stay worthwhile and was in a position to elevate its dividend.
Erie’s earnings-per-share in the course of the Nice Recession are under:
- 2007 earnings-per-share of $3.43
- 2008 earnings-per-share of $1.19 (65% decline)
- 2009 earnings-per-share of $1.89 (59% development)
- 2010 earnings-per-share of $2.85 (51% development)
Whereas Erie actually felt the ache from the Nice Recession, its earnings rebounded pretty shortly and the corporate remained worthwhile all through.
In contrast to many different monetary corporations, Erie Indemnity didn’t lower its dividend in the course of the Nice Recession. As a substitute, the corporate continued to boost its payout even throughout these troubled years, retaining its dividend development monitor report intact.
Subsequently, it’s clear that Erie is uncovered to recessions on account of working within the monetary sector. Nevertheless it additionally has a historical past of recovering from downturns nicely.
Valuation & Anticipated Returns
Primarily based on anticipated 2024 earnings-per-share of $11.50, ERIE shares are at the moment buying and selling for a P/E ratio of 35. That is above the inventory’s 10-year common P/E of 32.
Primarily based on Erie Indemnity’s previous report and the forecasted earnings-per-share development fee, we consider that the corporate’s shares needs to be valued at round 22 instances web earnings.
Because of this, ERIE inventory seems to be considerably overvalued right this moment. If the valuation reverts to 22 over the subsequent 5 years, shareholder returns could be lowered by -8.9% per yr over that interval.
Shareholder returns could be positively boosted by earnings-per-share development and dividends. We anticipate Erie to generate earnings-per-share development of 5.5% per yr.
Subsequent, shares are at the moment yielding 1.4%. Placing all of it collectively, whole returns are anticipated at -2.0% per yr. With unfavourable anticipated returns, we fee Erie inventory a promote.
Ultimate Ideas
Erie Indemnity has grown its earnings-per-share constantly over its historical past. The corporate is more likely to set a report for its earnings-per-share in 2025. The long-term development outlook is strong.
Nevertheless, the excessive valuation is a major headwind for Erie Indemnity’s forecasted whole returns. Erie Indemnity seems to be like a comparatively steady insurance coverage firm basically, however the excessive valuation causes shares to earn a promote suggestion at present costs.
Moreover, the next Certain Dividend databases comprise probably the most dependable dividend growers in our funding universe:
If you happen to’re in search of shares with distinctive dividend traits, take into account the next Certain Dividend databases:
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