Key Takeaways
📈 Essent’s dividend yield sits at 2.12% with an 11% recent increase, backed by a low 16.35% payout ratio, leaving room for continued growth.
💰 Operating cash flow reached $861.5 million and free cash flow was $844.8 million in the TTM period, showing strong earnings quality and capital flexibility.
🧐 Analysts maintain a generally positive outlook with a consensus price target of $61.71, despite mixed ratings and recent adjustments.
📊 The most recent earnings report showed $167.9 million in quarterly net income, with management highlighting steady performance and strategic capital moves into 2025.
Last Update 5/4/25
Essent Group Ltd. (ESNT) operates a focused and profitable business providing mortgage insurance and reinsurance solutions across the U.S. With a steady underwriting approach, strong capital position, and consistent free cash flow, the company has quietly built a reputation for disciplined growth and shareholder returns. Its leadership team, led by CEO Mark Casale, has remained committed to long-term value over short-term gains, guiding the company through varying housing and rate environments.
Shares of ESNT offer a modest yield with a growing dividend, supported by a low payout ratio and a clean balance sheet. The stock trades at attractive valuation levels relative to its earnings and book value, with room for upside as earnings continue to grow. Recent performance and technical signals suggest potential for continued strength into the next cycle.
Recent Events
As 2024 wrapped up, Essent continued to show the kind of financial performance that reflects a well-run, focused operation. Revenue for the year came in at $1.24 billion, which represents a solid 10.9% increase from the prior year. While earnings per share ticked down slightly—by around 4.3%—net income remained strong at $729 million. That’s a margin just shy of 59%, a reminder of how efficient this company is.
Some of the softness in EPS can be chalked up to macro conditions. Rising rates and a slower housing market have impacted most players in this space. What matters more is that Essent’s free cash flow stayed robust, clocking in at more than $560 million. That gives the company plenty of room to invest in growth, shore up its balance sheet, or return capital to shareholders—all without breaking stride.
What’s also encouraging is that management continues to steer the ship with discipline. The company isn’t chasing risky growth or stretching its balance sheet. Instead, it’s expanding thoughtfully and protecting margins—just the kind of strategy that serves long-term investors well.
Key Dividend Metrics 🧾
📈 Forward Dividend Yield: 2.12%
💵 Annual Dividend Rate: $1.24
💰 Trailing Dividend Yield: 1.96%
📊 5-Year Average Yield: 1.80%
🛡️ Payout Ratio: 16.35%
📅 Last Dividend Paid: March 24, 2025
📆 Ex-Dividend Date: March 14, 2025
For dividend investors, these numbers paint a picture of a company that’s not just paying out cash, but doing so from a position of real strength.
Dividend Overview
On the surface, Essent’s 2.12% yield might seem modest—especially in a world where you can find higher yields elsewhere. But take a second look, and there’s more going on here. The low payout ratio of just over 16% is the headline. It means this dividend isn’t just safe—it’s got room to grow, even if the economy hits a rough patch.
The company is highly profitable, with returns on equity over 13% and returns on assets above 8%. That tells you Essent knows how to deploy capital effectively. Instead of stretching to juice the yield, management is balancing payouts with smart reinvestment. That’s the kind of approach that often leads to better total returns over time.
One of the more impressive aspects of the company’s strategy is how consistent it has been. Even in uncertain times, they’ve kept the dividend intact and growing. For investors looking to build a reliable income stream, that kind of steadiness matters more than chasing an extra point or two of yield.
Dividend Growth and Safety
Essent began paying a dividend just a few years ago, in early 2020. Since then, it’s raised the payout every single year. That’s not just a nod to shareholder friendliness—it’s a sign of a business maturing in the right way. They’re not doing it to make headlines. They’re doing it because the fundamentals allow for it.
The latest dividend hike brought the annual payout up to $1.24 per share, a healthy 11% increase from the year before. What’s striking is how these raises have come with virtually no strain on the balance sheet. The company finished the year with almost $900 million in cash and only about $530 million in debt. That leaves a lot of breathing room.
Essent’s debt-to-equity ratio is under 10%, and the current ratio is close to 4. That tells you this is a company with plenty of liquidity and not much leverage. When you’re investing for income, those are the kinds of numbers that let you sleep at night.
Even better, the dividend is well covered not just by earnings but by free cash flow. That’s an important distinction. FCF is the real fuel for dividends, and Essent has plenty of it. Combine that with a management team that’s clearly focused on maintaining a conservative payout strategy, and you’ve got the makings of a durable, growing income stream.
Essent might not be on every dividend investor’s radar yet, but it probably should be. Between its strong balance sheet, disciplined management, and a growing payout backed by real earnings power, this is the kind of company that quietly delivers the kind of returns long-term investors look for.
Cash Flow Statement
Essent Group generated $861.5 million in operating cash flow over the trailing 12 months, reflecting steady core earnings power and efficient capital deployment. Free cash flow was also strong at $844.8 million, showing that very little of its operating cash is being consumed by capital expenditures, which remained modest at just under $17 million. This means most of what the business earns is available for shareholder returns, debt service, or reinvestment—an important marker of financial health.
On the investing side, the company used about $707 million, likely tied to portfolio expansion and asset allocations rather than heavy infrastructure or fixed asset spending. Financing cash flow came in at -$164.9 million, shaped by a mix of share repurchases and debt activity. Essent raised nearly $500 million in new debt but repaid $425 million, maintaining its conservative balance sheet. With just over $131 million in cash at year-end, the company retains solid liquidity, even after active capital deployment.
Analyst Ratings
📈 Essent Group Ltd. (ESNT) recently received an upgrade from JPMorgan, moving the stock from “Neutral” to “Overweight” with a price target of $60. This shift reflects increased confidence in the company’s steady underwriting performance and its resilience amid a somewhat sluggish housing market. Analysts appear to favor Essent’s strong capital reserves and risk-averse strategy, which help support its earnings consistency even as mortgage activity cools.
📉 On the flip side, Barclays lowered its rating on Essent earlier in the year, downgrading it from “Overweight” to “Equal Weight” while trimming the price target from $69 to $58. The concern here seems to revolve around macro pressures in the mortgage insurance space, particularly the potential slowdown in new insurance written as interest rates remain elevated. There’s also some caution over how rising costs and tighter housing affordability might impact future volume growth.
🎯 Despite the mixed opinions, analyst sentiment remains generally constructive. The current consensus 12-month price target sits at $61.71, with estimates clustered between $58 and $67. That suggests a modest upside from current levels and reflects a balanced view of both near-term headwinds and the company’s longer-term stability.
Earning Report Summary
Solid Finish to the Year
Essent Group closed out the fourth quarter of 2024 with a net income of $167.9 million, or $1.58 per share. While that number came in just a bit under what some had forecast, revenue for the quarter topped $315 million, which was ahead of expectations and marked a 6% bump compared to the same time last year. For the full year, net income landed at $729 million, or $6.85 per share, reflecting the company’s ability to stay profitable even as the housing market faced some headwinds.
CEO Comments and Strategic Moves
During the earnings call, CEO Mark Cassell pointed to Essent’s continued strength in credit performance and underwriting discipline. He acknowledged some turbulence from natural events like hurricanes and wildfires, which slightly impacted default activity, but emphasized how those risks were effectively managed. A notable highlight from the quarter was the execution of two new quota share reinsurance agreements that cover 25% of new insurance written for both 2025 and 2026. These deals are aimed at giving the company more flexibility with capital while tightening up on risk exposure.
Book value per share moved up to $63.36, an 11% increase over the prior year, while return on equity held steady at a strong 14%. Investment income also played a big part in the year’s success, coming in at $222 million—about 20% higher than the previous year. That boost helped reinforce the bottom line and gave leadership the confidence to raise the dividend again. The quarterly payout was bumped up 11% to $0.31 per share, and a new $500 million share repurchase program was approved, running through 2026.
Looking Ahead
Essent expects to keep its average premium rate consistent in the coming year and is guiding toward an effective tax rate of around 15.5% for 2025. Management is clearly focused on navigating what’s next for the mortgage insurance space with a steady hand, keeping an eye on long-term profitability while returning capital to shareholders along the way.
Chart Analysis
Price Trend and Moving Averages
Looking at the past year for ESNT, the stock has traded within a broad range but shown some notable trends worth breaking down. Early in the year, the price pushed steadily higher, supported by a strong move above both the 50-day and 200-day moving averages. That run peaked around October when shares touched the $65–66 range before losing momentum.
Since then, a clear downtrend set in through the fall and into winter, with the price slipping below the 50-day average and staying beneath it for several months. The 50-day moving average eventually crossed under the 200-day in a bearish signal late last year. But more recently, the price has pushed back above both moving averages with a sharp move higher at the start of May, hinting at a potential shift in sentiment and possibly the beginning of a more constructive phase.
Volume Behavior
Volume has been fairly consistent, with a few meaningful spikes that coincided with major price moves. The recent breakout in early May was backed by an uptick in volume, which is typically a good sign that the move has conviction. Throughout the rangebound months, volume stayed relatively balanced, showing that while interest wasn’t aggressive, it also didn’t drop off—a subtle nod to investor confidence holding steady.
Relative Strength Index (RSI)
The RSI has ranged from oversold levels near 30 to just above 70 in a few overbought instances. As of early May, it’s approaching the top end again, sitting close to 70. That doesn’t mean a reversal is imminent, but it does suggest the stock has rallied quickly and may need a breather in the near term. Over the year, RSI has bounced consistently off the 30–40 range, showing buyers stepping in on weakness with some reliability.
Broader View
Overall, the chart suggests a stock that experienced a solid run-up, corrected in a fairly orderly fashion, and now looks like it might be regaining upward momentum. The return above both key moving averages, combined with solid volume support, is a healthy technical development. Whether this marks the beginning of a longer trend higher or just a recovery to the middle of the range will depend on how the price holds up around current levels.
Management Team
Essent Group’s leadership brings a steady hand and deep industry knowledge, which shows up clearly in how the company operates. Mark A. Casale, the founder, continues to serve as Chairman and CEO, providing long-term stability at the top. His leadership has guided the company from its early days into a mature, profitable business without losing sight of its disciplined underwriting and risk-focused culture.
Supporting him is a team of experienced executives with strong backgrounds in insurance, finance, and risk management. CFO Lawrence V. McAlee has played a key role in maintaining the company’s financial health, ensuring the balance sheet stays flexible while supporting capital returns. Other executives in operations and analytics have also stayed with the firm for many years, creating consistency across departments. This continuity has helped Essent avoid the common pitfalls of turnover and strategic shifts.
The overall tone from leadership is pragmatic and grounded. They don’t chase headlines or make aggressive moves just to meet short-term goals. Instead, they manage the business with an eye on long-term performance, steady returns, and sustainable growth, which is reflected in the company’s solid financials and conservative balance sheet.
Valuation and Stock Performance
Essent currently trades at a forward price-to-earnings ratio around 8.6, which is modest considering its profitability and consistent returns. Its price-to-book ratio sits just above 1, indicating the stock is priced fairly close to the value of its assets. With margins near 59 percent and returns on equity above 13 percent, the valuation appears undemanding compared to peers in the insurance and financial services sectors.
Over the past year, the stock has moved mostly sideways after reaching a peak in the fall. It has held its ground despite rate volatility and a mixed housing environment, suggesting resilience in investor sentiment. Recent momentum into May suggests renewed interest, possibly reflecting improving technical conditions and confidence in the underlying business model.
Essent doesn’t need a surge in valuation multiples to deliver shareholder value. It generates consistent free cash flow, pays a growing dividend, and has committed to a meaningful buyback program. If the market begins to favor stable earnings over speculative growth, this stock could benefit from a broader shift in sentiment.
Risks and Considerations
Like any company tied to the housing sector, Essent is exposed to macroeconomic shifts. Rising interest rates or a slowdown in mortgage originations can directly affect the volume of new insurance written. If home prices were to fall meaningfully, that could also impact credit performance and claim activity.
There’s also a layer of regulatory risk. Mortgage insurers operate under guidelines that can shift based on federal policy or GSE rules. Any changes to capital requirements or underwriting standards could influence Essent’s operating model.
The business is also somewhat concentrated. It focuses primarily on the U.S. mortgage market, with limited diversification across insurance types or geographies. That singular focus has advantages in terms of specialization, but it also means less insulation from industry-specific shocks.
Competition in the space is intense. Private mortgage insurance providers often compete on price, and while Essent has typically prioritized margin over market share, that could become more difficult if peers begin to undercut pricing in pursuit of volume.
Final Thoughts
Essent Group has quietly built a business defined by consistency, profitability, and careful risk management. It doesn’t grab headlines, but it delivers results. The management team knows the industry and has shown a willingness to stay disciplined through cycles rather than overreact to market pressures.
Its current valuation reflects a level of caution from the market, but that caution doesn’t seem fully aligned with the company’s actual performance. With a growing dividend, a sizable buyback in place, and strong earnings coverage, the building blocks for shareholder value are already there.
While risks remain tied to the housing market and broader economic conditions, Essent has proven it can navigate those challenges. Its focus on core profitability, conservative underwriting, and capital strength provides a solid base to work from.
This isn’t a company built for the short term. It’s structured for resilience, long-term value creation, and steady returns—all qualities that can compound meaningfully over time.