Updated 3/6/25
Brown & Brown, Inc. (NYSE: BRO) is a company that’s been making waves in the insurance brokerage industry for decades. With a business model focused on retail, wholesale, and program insurance solutions, it has built a strong reputation for reliability and growth. The company has been expanding through a mix of organic initiatives and strategic acquisitions, allowing it to maintain steady revenue streams.
For investors seeking dividends, BRO may not be a high-yield stock, but it has plenty to offer in terms of growth, stability, and financial health. The company has been consistently increasing its dividend while keeping its payout ratio low, signaling a strong commitment to returning value to shareholders. Let’s take a closer look at the key aspects that matter most for dividend-focused investors.
Key Dividend Metrics
🤑 Forward Dividend Yield: 0.50%
💰 Annual Dividend Rate: $0.60
📈 5-Year Average Dividend Yield: 0.66%
🔄 Consecutive Dividend Increases: Over 30 years
🔒 Payout Ratio: 15.61% (Plenty of room for growth)
📅 Ex-Dividend Date: February 5, 2025
📆 Payment Date: February 12, 2025
Dividend Overview
For those looking for high dividend yields, BRO isn’t going to be the first pick. At 0.50%, the yield is relatively low compared to traditional income stocks. However, what sets BRO apart is its steady and reliable dividend growth. The company has increased its dividend for more than 30 years, proving its commitment to shareholders.
The low 15.61% payout ratio is a huge positive. This means the company is keeping its dividend well-covered, giving it the flexibility to reinvest in growth while still rewarding investors. It’s a model that works well for companies with strong expansion potential.
Dividend Growth and Safety
One of the biggest advantages of investing in BRO is dividend consistency. This is not a company that makes dramatic moves with its payouts, but rather one that steadily increases them year after year.
- Dividend Growth: BRO has consistently raised its dividend, reflecting strong financial health.
- Payout Ratio: With just 16% of earnings being paid out as dividends, there’s a large cushion to maintain future increases.
- Cash Flow Strength: The company generates significant free cash flow, supporting both growth initiatives and dividend payments.
Unlike some high-yield stocks that carry the risk of dividend cuts, BRO’s conservative payout strategy makes it one of the safer dividend options in the market.
Chart Analysis
Price Trend and Moving Averages
The price action for Brown & Brown (BRO) has been on a strong upward trajectory over the past year, with a clear pattern of higher highs and higher lows. The 50-day moving average (orange line) has acted as dynamic support for much of the trend, although there were brief periods where the stock dipped below it before rebounding. The 200-day moving average (blue line) has remained in a steady uptrend, reflecting long-term strength.
Recently, the stock has surged well above both moving averages, signaling strong momentum. The distance between the current price and the 50-day moving average suggests that the stock may be in an extended phase of the uptrend, potentially due for a period of consolidation or a minor pullback.
Volume and Buying Interest
The volume bars show periods of strong accumulation, particularly during key breakout points. There were a few notable spikes in volume, especially in the last quarter, which coincided with significant price movements. Higher volume on up days suggests that institutional investors are still supporting the uptrend.
However, recent trading sessions show volume tapering off slightly, which could indicate that some investors are locking in profits at these higher levels. If volume continues to decline while the stock remains elevated, it could be a signal that momentum is slowing down.
Relative Strength Index (RSI)
The RSI is currently sitting around 78, which is deep into overbought territory. Typically, an RSI above 70 suggests that a stock may be overextended in the short term. While strong uptrends can sustain high RSI levels for extended periods, it does raise the possibility of a cooling-off phase or a pullback.
If the RSI begins to turn downward while the price remains near recent highs, it could be a signal that buyers are losing strength. On the other hand, if the stock continues pushing higher with sustained volume, the overbought condition may persist for a while longer before any significant correction.
Recent Price Action
Looking at the latest five candles, there has been a mix of small-bodied candles with some wicks on both ends. This suggests some indecision among traders at these levels. The lack of large bearish candles indicates that sellers haven’t taken control yet, but the extended rally and high RSI could make the stock more vulnerable to a pullback.
If the stock continues to hold its gains while consolidating near the highs, it could set up for another leg higher. However, if selling pressure increases and the stock pulls back toward the 50-day moving average, it would be a normal and healthy retracement within the broader uptrend.
Analyst Ratings
📈 Upgrades
🟢 Morgan Stanley – February 13, 2025
Morgan Stanley reaffirmed an Overweight rating on BRO and raised the price target to $128 from $125. The firm highlighted strong financial performance and a positive growth outlook, driven by steady revenue expansion and a solid acquisition strategy. Analysts pointed to the company’s ability to maintain profitability even in a rising rate environment, reinforcing confidence in its long-term prospects.
🟢 RBC Capital – January 29, 2025
RBC Capital increased its price target for BRO to $120 from $118, keeping its Outperform rating intact. The analysts cited strong organic growth trends and new business developments as the main drivers for their optimism. They emphasized that Brown & Brown’s expansion strategy continues to yield results, particularly in specialty insurance segments, which have been a key contributor to revenue gains.
📉 Downgrades
🔴 Keefe, Bruyette & Woods (KBW) – January 10, 2025
KBW downgraded BRO to Underperform and reduced the price target to $97 from $99. The firm raised concerns about valuation, stating that the stock’s recent run-up had outpaced its near-term earnings potential. Analysts believe that while the company remains strong fundamentally, the stock may have limited upside from current levels unless earnings growth accelerates further.
🔴 Jefferies – December 20, 2024
Jefferies maintained a Hold rating on BRO but slightly adjusted the price target to $107 from $104. Analysts expressed caution regarding the stock’s valuation compared to its industry peers, noting that while the company has shown resilience, its price may already reflect much of the near-term growth potential.
📊 Consensus Price Target
The average 12-month price target for Brown & Brown currently stands at $116.40, based on projections from multiple analysts. Individual targets range from a low of $97 to a high of $130. The consensus rating remains Moderate Buy, reflecting a generally positive outlook while acknowledging some valuation concerns.
These updates indicate a mix of optimism and caution, with analysts recognizing the company’s operational strengths while keeping a close watch on whether current valuation levels leave room for further upside.
Earnings Report Summary
Brown & Brown just wrapped up another strong quarter, showing why it continues to be a solid player in the insurance brokerage world. The company’s latest earnings report revealed steady growth, increased revenues, and strong profitability, reinforcing its position as a reliable performer.
How the Quarter Played Out
Revenue came in at $1.18 billion for the fourth quarter, up 15.4% from the same period last year. A big chunk of this came from commissions and fees, which also climbed 15.4% to $1.16 billion. Even investment income saw a boost, rising to $22 million, compared to $18 million a year ago.
Earnings per share beat expectations, landing at 86 cents, when analysts had predicted around 77 cents. That’s a solid sign that the company is managing its costs well while still growing its top line.
Looking at the Full Year
For the entire year, total revenue reached $4.81 billion, a nice jump from $4.26 billion in 2023. Net income also climbed higher, hitting $993 million, compared to $871 million the year before. That translated into $3.46 per share, up from $3.05 in 2023.
Brown & Brown’s business model has proven to be resilient, even with shifting economic conditions. Demand for insurance remains strong, with more companies and individuals prioritizing coverage against risks like cyber threats and natural disasters.
What’s Driving Growth?
A big part of Brown & Brown’s success comes from its steady expansion strategy. The company has been making smart acquisitions, including its recent deal to acquire assets from The Canopy Group. Moves like this help strengthen its portfolio and expand its footprint in key markets.
Another bright spot has been the stock’s performance. Shares ticked up 0.6% after the earnings release, and over the past year, the stock has climbed 43.5%, outpacing major market indexes like the S&P 500 and Nasdaq.
Brown & Brown continues to execute well, growing its revenue while keeping profitability strong. With steady demand for insurance and a well-managed expansion strategy, the company remains on a solid path heading into the future.
Financial Health and Stability
One of the main reasons BRO can sustain and grow its dividend is its strong financial position. The company operates in the insurance brokerage industry, which provides relatively stable cash flows.
✅ Revenue Growth: $4.71 billion (up 15.2% year-over-year)
✅ Profit Margin: 21.07% (healthy profitability)
✅ Operating Cash Flow: $1.17 billion (strong cash generation)
✅ Debt-to-Equity Ratio: 63.07% (moderate but manageable leverage)
The company has been growing revenue at a solid pace, mainly due to acquisitions and market expansion. While earnings dipped by 21.9% year-over-year, this is likely a temporary fluctuation rather than a long-term concern.
The balance sheet is relatively strong, with enough cash flow to handle both dividends and expansion efforts. While the company does have some debt, it isn’t at a level that would put pressure on the dividend.
Valuation and Stock Performance
BRO isn’t a cheap stock by traditional valuation metrics. Investors tend to pay a premium for quality, stability, and growth potential, which is exactly what BRO offers.
- Price-to-Earnings (P/E):
- Trailing P/E: 34.56
- Forward P/E: 28.49
- Price-to-Sales (P/S): 7.22
- Enterprise Value/EBITDA: 21.77
The stock has been on a strong upward trajectory, outperforming the broader market. Over the past year, BRO has risen 39.3%, compared to the S&P 500’s 13.29% gain. Currently trading near its 52-week high of $120.61, it’s clear that investor confidence remains high.
Some investors may prefer to wait for a pullback before adding shares, but for those with a long-term mindset, BRO has a history of rewarding patient investors.
Risks and Considerations
Every stock comes with risks, and BRO is no exception. While it has strong financials and a consistent track record, there are a few things investors should keep in mind.
⚠️ Low Dividend Yield – At 0.50%, the yield isn’t enough for income-focused investors who rely on dividends for passive income.
⚠️ High Valuation – With a P/E ratio above 34, BRO is trading at a premium. Any slowdown in earnings growth could put pressure on the stock price.
⚠️ Acquisition Risks – The company relies heavily on acquisitions for growth. While this has worked well in the past, a poorly executed deal could impact profitability.
⚠️ Interest Rate Sensitivity – Higher interest rates could increase borrowing costs, potentially affecting the company’s ability to fund future acquisitions.
Despite these risks, the company’s fundamentals remain strong, and its track record suggests it has the experience to navigate challenges.
Final Thoughts
Brown & Brown, Inc. is a reliable dividend growth stock, but not one that will appeal to every investor. Those looking for high yields may want to explore other options, but for those who value long-term stability, financial strength, and compounding dividend growth, BRO offers a compelling opportunity.
The company has a low payout ratio, strong earnings growth, and a resilient business model, making it an attractive pick for investors with a long-term mindset. While the stock isn’t cheap, quality businesses like BRO rarely trade at bargain prices.
For investors who appreciate consistent dividends, strong financials, and solid total return potential, BRO remains a stock worth keeping on the radar.
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