Here's Why You Should Hold Travelers (TRV) in Your Portfolio

Core Viewpoint - Travelers Companies, Inc. (TRV) demonstrates a strong portfolio, high retention rates, positive premium changes, solid returns from non-fixed income investments, and sufficient liquidity, making it a stock worth retaining in investment portfolios [1] Financial Projections - The Zacks Consensus Estimate for Travelers' 2024 earnings per share indicates a year-over-year increase of 35.6% from the 2023 estimate, with revenues projected at $46.33 billion, reflecting an 11.7% improvement [2] - For 2025, the earnings per share estimate suggests a 14.4% year-over-year increase, with revenues expected to reach $50 billion, indicating a 7.9% growth from 2024 [2] Estimate Revisions - The Zacks Consensus Estimate for 2024 and 2025 earnings has increased by 0.5% and 0.7%, respectively, over the past 30 days, which may boost investor confidence [3] Stock Performance - TRV currently holds a Zacks Rank 3 (Hold) and has gained 20% over the past year, compared to the industry growth of 25.3% [4] Style Score - Travelers has a VGM Score of A, indicating attractive value, strong growth, and promising momentum [6] Return on Capital - The return on equity for Travelers is 13.9%, significantly higher than the industry average of 7.3%, showcasing efficient use of shareholders' funds [7] - The return on invested capital stands at 7.6%, outperforming the industry average of 5.5%, reflecting effective fund utilization to generate income [7] Business Drivers - Premiums, a key revenue component, are expected to benefit from strong retention rates, positive renewal premium changes, and increased new business premiums in Domestic Automobile and Domestic Homeowners [8] - The company is optimistic about its personal lines business due to growth in agency auto and homeowners segments, higher invested assets, and improved results from its fixed-income portfolio [9] Financial Strategy - Travelers maintains a long-term financial strategy focused on generating capital beyond growth needs, balancing capital rightsizing, and increasing book value per share over time [9] - The company has consistently achieved free cash flow conversion above 100%, indicating solid earnings [10] Dividend and Share Repurchase - TRV announced a 5% increase in its quarterly cash dividend in Q1 2024, marking the 20th consecutive year of dividend increases with a compound annual growth rate of 8%, and its current dividend yield is 1.8%, surpassing the industry average of 0.3% [10] - The company has $5.79 billion remaining under its share repurchase authorizations [10] Comparable Stocks - Other well-ranked stocks in the property and casualty insurance sector include Arch Capital Group Ltd. (ACGL), Palomar Holdings, Inc. (PLMR), and NMI Holdings Inc (NMIH), with ACGL and PLMR holding a Zacks Rank 1 (Strong Buy) and NMIH at Zacks Rank 2 (Buy) [11]