Whereas Wall Avenue chases NVIDIA (NVDA), the true AI dividend story is unfolding within the sleepy insurance coverage sector. These “boring” corporations are quietly leveraging AI instruments to slash prices, develop premiums, and–best of all–dish us larger dividends.
AI is spreading throughout the economic system a lot sooner than many anticipated. Which means we have to transfer even sooner to front-run that shift.
We have already been exhausting at it. In July, we talked about our favourite dividend payer to seize as AI reworks farming. Few individuals understand it, however “ag” has an extended historical past of leveraging tech. It is a large purpose why productiveness per farm employee has shot up 16X since 1948.
Then there’s small business–and our favourite 8.8%-paying enterprise growth firm (BDC), which funds many of those “mom-and-pop” retailers. You do not hear a lot about it, however small biz is wildly optimistic as AI helps it remedy considered one of its hardest challenges: discovering expert employees.
So the place to subsequent?
Insurance coverage: Our Subsequent Cease for AI-Powered Dividend Progress
When most individuals take into consideration AI in enterprise, they give thought to annoying customer-service chatbots. However that is simply the general public facet, and solely a small a part of the story.
The actual AI “juice”–especially for insurers–is on the again finish. Image an AI app pulling knowledge from a affected person’s medical data, zipping by the underwriting course of and delivering a quote in seconds. Whereas that is happening, one other runs compliance checks.
Claims? Ship in an image of your broken automotive/home/enterprise and your payout pops into your account in minutes. Absolute gold for buyer retention.
All of that is taking place in insurance coverage proper now. And that is simply on the effectivity facet.
The expansion story is the place issues get attention-grabbing, as salespeople use AI to zero in on leads and cross-sell merchandise. One instance, cited in a July 2025 report from analysis agency McKinsey & Co., is that an AI app might assess a brand new life-insurance buyer and toss out a personalised bundle, together with incapacity and critical-illness protection.
As I mentioned, initiatives like these are driving actual returns for insurers as we speak. And in line with a January 2024 report from McKinsey, insurers that prioritize tech, together with AI, have delivered far larger complete shareholder returns (TSR) than corporations in different sectors:
The most effective a part of all for us is that the general public nonetheless sees insurers as stuffy pencil-pushers (the identical kind of outdated view that hovers over agriculture).
Let’s dive into three insurers main the way in which in AI, and prone to hand their financial savings (and revenue progress) to us within the type of dividend hikes. All of them have enchantment, however to make issues easy, I’ve ranked them from “worst to first.”
Bronze Medal: Progressive Corp. (PGR)
Progressive (PGR) was already a frontrunner in algo-driven insurance coverage earlier than AI got here alongside. By way of fictional salesperson “Flo,” it might ship a aggressive insurance coverage quote for a automotive, house or perhaps a boat in a couple of minutes. Quick-forward to as we speak and Flo is, you guessed it, a chatbot.
Trying a bit deeper, the corporate is utilizing AI to additional refine Snapshot–its program that adapts charges primarily based on real-time knowledge from a buyer’s automotive. It is also utilizing the tech to investigate pictures of harm to hurry up claims.
Members of my Hidden Yields service will keep in mind this one: We bagged an 87% return on it throughout our final holding interval, from June 2019 to Could 2023.
PGR stays on my watch listing, and we cannot hesitate to leap again into this savvy dividend payer (whose 0.16% yield masks the truth that it pays most of its dividend as a year-end particular payout–often a giant one).
However with the inventory buying and selling round 4.4-times ebook worth, that point isn’t now. We might additionally prefer to see extra buybacks: PGR’s share depend is about the place it was 10 years in the past.
Silver Medal: The Vacationers Cos. (TRV)
The Vacationers Cos. (TRV) is a huge in insurance coverage, providing every little thing from property to private and enterprise protection. On the claims facet, Vacationers, like Progressive, makes use of AI to investigate photos of property injury and velocity funds to policyholders, typically earlier than a human ever units foot on the positioning.
That sort of velocity offers TRV a a lot better shot at conserving clients happy–and hanging on to their enterprise.
On the expansion facet, the corporate has instruments like Enterprise Proprietor Coverage 2.0, which quickens underwriting, getting a quote into a brand new small enterprise buyer a lot sooner than in “analog” days. In response to the corporate, the method cuts the variety of questions a possible new enterprise consumer has to reply by 70%, from round 40 to roughly 9.
Strikes like these are rocket gasoline for a enterprise that is already firing on all cylinders. Within the second quarter, TRV noticed its disaster losses drop from $1.5 billion a 12 months in the past to $927 million. Written premiums jumped 4% and web funding earnings jumped 6%. That final quantity is especially spectacular since an insurer’s “float”–made up of complete premiums collected–has to be positioned in safer investments.
Administration loves its shareholders, too: During the last decade, Vacationers purchased again 26% of its shares and hiked its payout 80%. That is pushed the share value up a stout 170%. With reinvested dividends, that return jumps to 237%!
Dividend, Buybacks Launch Vacationers’ Share Worth
The one downside? We like to purchase a inventory when the share value lags its “Dividend Magnet”–a true signal of value–and that is not the case right here. That is why we’re placing this “stealth” AI dividend play on our watch listing, as an alternative of our purchase listing.
Gold Medal: American Worldwide Group (AIG)
Meantime, the AI focus at American Worldwide Group (AIG) is solidly on underwriting. The corporate has teamed up with Palantir Applied sciences (PLTR) and Anthropic to develop AI instruments that supercharge its human underwriters.
By way of these offers, it goals to assist its underwriters course of 500,000 E&S submissions in 2030, producing no less than $4 billion in new enterprise premiums. (E&S covers dangers that do not match neatly within the silos of different kinds of protection.) To place that in context, AIG generates about $28 billion in income a 12 months.
AIG additionally plans to create a “digital twin,” sort of a digital mock-up of itself administration can use to see what numerous choices might have on the enterprise.
It is on the dividend entrance that AIG will get actually attention-grabbing. It yields 2.3% as we speak and, following an extended, stale interval stretching again to 2016, it has just lately sprung again to life. Administration hasn’t been leaving traders out within the chilly, though–it’s been busy shopping for again its ultra-cheap inventory.
That features a large repurchase of 56% of its shares excellent within the final decade. Higher nonetheless, it has been accelerating these payouts simply because it’s reawakened its dividend:
From “Meh” to a Shareholder’s Dream
Usually we do not prefer to see an organization purchase extra of its inventory because it’s rising, as is the case right here. However AIG’s cheap valuation of round ebook worth is backed up by its share value, which nonetheless lags the dividend. An AI-powered effectivity increase would solely add to the inventory’s momentum.
The Dividend Magnet Is Flashing BUY on These 5 Pink-Sizzling Innovators Now
In relation to AI, Wall Avenue remains to be obsessive about Massive Tech. However what they are not telling you is that lots of the large identify AI positive aspects are already priced in there.
That is why we’re wanting past Silicon Valley for our subsequent AI-driven dividend-growth hit. Insurance coverage is simply the beginning.
To search out the subsequent large dividends about to pop, and the share-price positive aspects they will drive, I depend on my Dividend Magnet system.
I gave you a style of this confirmed technique a second in the past, however now I wish to present you the way it works–and methods to use it your self.
Higher but, I will reveal 5 different fast dividend growers the Dividend Magnet has flagged for enormous payout progress within the coming months. They’re hidden bargains, with dividends that are not simply rising, however accelerating.
One is a direct AI beneficiary with a dividend that is soared 425% within the final decade–and it is simply getting began.
But Wall Avenue is quick asleep on these shares. The time to purchase them is now.
Click on right here and I will stroll you thru my Dividend Magnet technique and offer you a FREE Particular Report revealing the names and tickers of all 5 of those fast dividend growers.
Additionally see:
• Warren Buffett Dividend Shares
• Dividend Progress Shares: 25 Aristocrats
• Future Dividend Aristocrats: Shut Contenders
The views and opinions expressed herein are the views and opinions of the writer and don’t essentially mirror these of Nasdaq, Inc.
