Sunday, October 28, 2012

OneBeacon Insurance: High Dividend Stock With Juicy Options

OneBeacon Insurance (OB) is a recent addition to the Financials section of our high dividend stocks by sector tables (see here).

This Bermuda-based, dividend paying stock traces its roots all the way back to 1831, as the Potomac Fire Insurance Co.

OB recently returned to profitability in Q4 2009, posting earnings of $.76/share, vs. a -$1.81/share loss in Q4 2008.

They also were quite profitable for full year 2009, with earnings of $3.60/share, vs. a -$3.99/share loss in 2008.

The company also had 31% growth in book value in 2009, and a slightly improved combined ratio of 94%. (Combined ratio measures an insurance firm's incurred losses and expenses, divided by its earned premiums, and doesn't include investment income.)

OB is transitioning into a specialty insurance firm, having recently sold its Commercial Lines and Personal Lines businesses, a move they say will significantly lessen their catastrophe exposure and add greater profits, in addition to freeing up significant capital.

Withstanding its higher debt load, OneBeacon has many favorable metrics in our industry comparison chart

OB closed at $15.12 on Friday, and its current dividend yield is 5.56%. Last week they declared a $.21 quarterly dividend, payable on March 31, to shareholders on record as of March 17th. In addition to this attractive dividend, OB has some juicy call and put options for investors also interested in trading options, i.e., selling covered calls or selling cash-secured puts:

Disclosure: Author holds no positions yet. This article is written for informational purposes only.

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