Monday, January 26, 2015

Recent Buy - Travelers Companies Inc (TRV)

Hi Everyone,

January continues to be a busy month in terms of buying companies for the American Dividend Dream portfolio.  With the market staying around all time highs I continue to look for companies that are attractively valued.  With that being said, I found that the insurance businesses seem to be of decent value.  In particular, I found that Travelers was one of the cheapest around and has a 150 year history.  With decent value and great history, I figured I would pull the trigger.  My only exposure to insurance is Aflac right now and their business is heavily tied to Japan.  So without further adieu...

I purchased 19 shares of Travelers (TRV) at 106.75.  This purchase adds $41.80 of annual dividends to my account.

I now own 19 shares of Travelers as this was a new purchase which means I have 30 individual companies that I am invested in.  Phew that's a lot!  I may add to this position in the future, or I might buy an equal position of Chubb (CB) to round out my insurance portion of my portfolio.  Forward dividends now stand at around $3,528 for the next 12 months and I just happened to get Travelers before the ex-dividend date so I will not miss any of their payouts!  The portfolio will be updated to reflect this purchase.

From Google Finance: The Travelers Companies, Inc. (TRV) is a holding company. The Company, through its subsidiaries, is engaged in providing a range of commercial and personal property and casualty insurance products and services to businesses, Government units, associations and individuals. The Company is organized into three business segments: Business Insurance; Financial, Professional and International Insurance, and Personal Insurance. The Business Insurance segment offers an array of property and casualty insurance and insurance-related services to its clients primarily in the United States. The Financial, Professional and International Insurance segment includes surety and financial liability coverage's, which primarily use credit-based underwriting processes, as well as property and casualty products that are marketed on a domestic basis. In November 2013, the Company completed the sale of its wholly owned subsidiary The Dominion of Canada General Insurance Company to The Travelers Companies, Inc.

TRV Chart:


P/E:  9.97
Yield:  2.06%
Market Cap:  34.5B
Dividend Growth Rate (6yr):  11.5%
Payout Ratio: 23.5%
Years of Dividend Growth:  6 years

A few other details about Travelers that could be of interest and were certainly a determining factor with the purchase:  1.  Look at the "recession" we had in 2008/2009...  you can hardly see it on the chart above...  TRV is somewhat "recession proof"  2.  TRV just destroyed the earnings estimates this past quarter:  beat by .54 cents which was 21% higher than the estimates.  Book value is $71.  3.  Finally and greatest of all:  Travelers loves to buy back shares!  This past year alone, they bought 35.8M shares which was roughly 9% of the total shares outstanding.  In the past 6 years, they have bought back half of their outstanding shares which has clearly helped the stock price as seen above.  They continue to reward shareholders in this fashion as well.  As of October 2014, they had $5.75B obligated to share repurchases.  Couple that with 11.5% dividend growth and you've got yourself a powerful stock!

So there you have it, the next building block on the path to the American Dividend Dream!  What do you think, good purchase, bad purchase?  What are you looking to buy next?


  1. ADD,

    Great buy! I was actually looking into buying this same stock as well because of the great dividend payout. I decided to go with O and COP who also pay great divs. Feel free to take a look at my portfolio! Also, nice timing to pick it up right before the ex-div! Any thoughts on what your next buy is?

    Take care,

    1. Thanks for the comment. You can't go wrong with O and COP, thats for sure! You've got a nice start to your portfolio there, especially for being so young. Keep at it and you'll be very happy with yourself once you finish schooling. I kick myself for not thinking about being a pharmacist when I was in college. The salary for that job is amazing but oh well.

      Funny you should ask about my next purchase... I'm about to write up the next post on that very subject. Check back to find out which one!

  2. This is a solid buy and I always had it on the back burner of my mind. In the insurance space I own AFL and CB but TRV would be a forefront consideration on my part. Great pick up sticking to some real deal companies and not just chasing yield. Thanks for sharing.

    1. I think both of us will be happy with our respective picks in the years to come. I already owned AFL as well and was debating between TRV and CB. TRV had a killer quarter and the stock barely moved so I thought I'd pick some up. You'll see with my next purchase that I went with a stock with not so high of yield but great dividend growth and a balance sheet that is flawless.

      Thanks for posting!