Last Update 3/10/25
Kinsale Capital Group (NASDAQ: KNSL) is a specialty insurance provider operating in the excess and surplus (E&S) market. This means they insure risks that standard insurance companies often won’t cover, which gives them a unique niche in the property and casualty insurance space. Since going public in 2016, Kinsale has grown rapidly, leveraging disciplined underwriting and a strong focus on profitability.
For dividend investors, Kinsale isn’t a traditional income-generating stock, but it offers something different—a combination of growth and a steadily rising dividend. While the yield may not be impressive at first glance, the company’s ability to compound earnings and maintain financial stability makes it an interesting choice for long-term investors.
Let’s dive into what makes Kinsale an intriguing dividend stock.
Key Dividend Metrics
📌 Dividend Yield: 0.15% (low, but with room to grow)
📌 Annual Dividend: $0.68 per share
📌 Payout Ratio: 3.37% (highly conservative)
📌 5-Year Average Dividend Yield: 0.18%
📌 Dividend Growth Rate: Steady upward trend
📌 Ex-Dividend Date: February 27, 2025
📌 Dividend Payment Date: March 13, 2025
Dividend Overview
Kinsale’s dividend yield is on the lower end, but that doesn’t mean it should be ignored. The company has been consistent in rewarding shareholders with small but meaningful increases. What stands out is its incredibly low payout ratio of just 3.37%. This means that the vast majority of earnings are being reinvested back into the business, which fuels its continued growth.
For investors focused on immediate income, Kinsale might not be the best fit. However, for those with a long-term outlook, this stock has the potential to become a strong dividend compounder over time. The steady increases in payouts suggest management is committed to growing the dividend responsibly while maintaining financial flexibility.
Dividend Growth and Safety
Kinsale’s dividend might not be flashy, but it’s built on a solid foundation. Here’s why it stands out:
- A Strong Growth Record – The company has consistently increased its dividend over the years. While the starting yield is low, Kinsale is in the early stages of its dividend journey.
- Extremely Low Payout Ratio – A payout ratio under 5% means that even during challenging economic conditions, Kinsale has plenty of room to maintain or even increase its dividend.
- Healthy Free Cash Flow – With nearly $941 million in free cash flow, the company has ample liquidity to support dividend payments and fund expansion.
- Minimal Debt Levels – A debt-to-equity ratio of just 12.41% keeps financial risk in check, ensuring dividends aren’t threatened by excessive borrowing.
These factors make Kinsale’s dividend not only safe but also likely to grow steadily over time.
Chart Analysis
Price Action and Trend
Kinsale Capital Group (KNSL) has been moving in a wide range over the past year, showing periods of strong rallies followed by sharp pullbacks. The most recent price action has seen the stock recover from a dip and close at 446.27, near the upper part of the day’s range. It opened at 435.44, hit a low of 429.89, and managed to push higher throughout the session, reaching a high of 447.19. This kind of price movement suggests some buying interest, especially with a strong close relative to the day’s range.
Looking at the longer-term trend, the stock had a strong run-up in late 2024 but has experienced some volatility since then. The 50-day simple moving average (SMA) has been sloping downward, indicating some short-term weakness, while the 200-day SMA remains more stable. The stock is currently testing a key area near the 200-day SMA, which could act as a pivot point for future direction.
Moving Averages
The interaction between the 50-day and 200-day moving averages is noteworthy. The 50-day SMA has recently crossed below the 200-day SMA, which is often viewed as a bearish signal. However, price action is now moving back toward these key levels, and if the stock can hold above the 200-day SMA, it may signal a potential reversal of the recent downtrend.
A break above the 50-day SMA could confirm renewed strength, while a rejection at these levels could lead to another leg down. These moving averages will likely act as dynamic support and resistance levels in the coming sessions.
Volume Analysis
Volume has been relatively muted in recent sessions compared to the large spikes seen in previous months. The biggest volume surges over the past year occurred during sharp declines, which suggests that selling pressure was present at those times. More recently, volume has remained steady but below the peaks seen during periods of heavy selling.
The most recent session saw a volume of 114,382, which is in line with average levels but not a major breakout signal. For a strong move higher, it would be encouraging to see volume increase, indicating that buyers are stepping in with conviction.
Relative Strength Index (RSI)
The RSI, which measures momentum, has been in a lower range but is now attempting to move back up. Previously, RSI dipped into oversold territory, suggesting that the stock was under heavy selling pressure. Now, it appears to be climbing again, which could indicate improving sentiment.
If RSI continues to rise and moves above the mid-50s, it could confirm a shift in momentum. On the other hand, if it stalls or turns lower, it could mean the stock remains in a consolidation phase before making its next move.
Recent Candlestick Behavior
The last five candles provide an interesting perspective on market sentiment. The most recent candle is a strong green close, showing that buyers were able to push prices higher by the end of the session. The previous session also showed buying interest after a brief dip, reinforcing short-term support.
Some earlier candles had long upper wicks, indicating that sellers stepped in at higher levels. This suggests that while there is buying interest, there is also some hesitation, likely due to the nearby moving averages acting as resistance. If the stock can sustain its momentum and push through these key levels, it could attract more buyers. However, if rejection occurs again, it may indicate another period of sideways action or a potential pullback.
Analyst Ratings
📈 Upgrades:
🔹 On October 28, 2024, Wolfe Research upgraded Kinsale Capital Group from “Peer Perform” to “Outperform” and set a price target of $535. This upgrade was driven by the company’s strong earnings growth and disciplined risk management. Analysts pointed to Kinsale’s ability to expand in the specialty insurance market, highlighting its competitive advantage and consistent underwriting profitability. The firm’s growth trajectory in a niche sector was seen as a key reason for the more optimistic rating.
📉 Downgrades:
🔻 On February 14, 2025, Morgan Stanley lowered its price target for Kinsale Capital Group from $535 to $520, maintaining an “Overweight” rating. The downgrade reflected concerns about increasing competition in the specialty insurance space, which could pressure future growth rates. Analysts also noted the possibility of market saturation, which might make it more challenging for Kinsale to maintain its historical rate of expansion. Despite this, Morgan Stanley still sees upside, but with a slightly more cautious outlook.
🎯 Consensus Price Target:
📊 The latest consensus 12-month price target for Kinsale Capital Group is $468.56, based on evaluations from 11 analysts. The range of price targets varies from a low of $390 to a high of $535, indicating a wide spectrum of expectations. This suggests that while analysts remain largely positive on the stock, there are differing opinions on how external market conditions could impact the company’s future performance.
These updates reflect a balanced mix of optimism surrounding Kinsale’s financial strength and the potential headwinds it may face in an evolving insurance landscape.
Earnings Report Summary
Kinsale Capital Group wrapped up 2024 with strong financial results, showing impressive growth across the board. The company, which specializes in excess and surplus insurance, delivered higher profits, solid underwriting performance, and steady premium growth.
Fourth Quarter Highlights:
- Net income for the quarter came in at $109.1 million, a solid jump from the $91.1 million reported the year before.
- Earnings per share (EPS) landed at $4.62, beating expectations and improving from $3.87 in Q4 2023.
- Gross written premiums grew 12.2 percent year-over-year, reaching $412.1 million.
- The combined ratio, which measures underwriting profitability, improved to 73.4 percent, showing better risk management and cost efficiency.
Full-Year 2024 Highlights:
- Net income for the full year surged to $414.8 million, up from $276.3 million in 2023.
- Full-year EPS climbed to $17.78, compared to $11.78 the previous year.
- Gross written premiums hit $1.9 billion, reflecting an annual growth rate of 19.4 percent.
- The combined ratio improved to 76.4 percent, down from 80.0 percent in 2023, which signals more disciplined underwriting.
What’s Driving the Growth?
Kinsale’s success comes down to smart underwriting, strategic pricing, and strong risk management. By focusing on niche markets, the company has been able to maintain its edge and drive premium growth. Technology investments have also helped streamline operations, reduce costs, and improve service efficiency.
Another big win for Kinsale was in its investment income, which jumped 37.8 percent in the fourth quarter. By sticking to a conservative yet effective investment strategy, the company generated strong returns that added to its bottom line.
Challenges and Outlook
No company is without hurdles, and for Kinsale, one of the biggest setbacks in 2024 was the Southern California wildfires, which resulted in $25 million in pre-tax losses. Even with this hit, the company managed to keep its profitability strong, thanks to disciplined underwriting and risk management.
Looking ahead, Kinsale expects to continue growing at a 10 to 20 percent annual rate. Management remains confident in the company’s ability to capitalize on opportunities in the specialty insurance space while keeping costs under control.
Overall, Kinsale’s 2024 performance reflects a well-run business that knows how to balance growth with profitability. The company has positioned itself well for the future, and if it stays on this path, it’s likely to see continued success in the years ahead.
Financial Health and Stability
A dividend is only as strong as the company paying it. Kinsale stands out with exceptional profitability and disciplined financial management.
✔️ Profit Margin: 26.13%, which is strong for the insurance sector
✔️ Operating Margin: 34.26%, reflecting strong pricing power
✔️ Return on Equity (ROE): 32.28%, showing efficient use of shareholders’ capital
✔️ Quarterly Revenue Growth: 17.40%, signaling continued expansion
Kinsale’s return on assets sits at 7.58%, which indicates it is using its capital efficiently. While the company has a lower current ratio of 0.19, its strong cash flows mitigate liquidity concerns. The one drawback is its high price-to-book ratio of 7.05, meaning investors are paying a premium relative to its net assets. However, this is often justified by Kinsale’s profitability and growth potential.
Valuation and Stock Performance
Kinsale has been a strong performer, but the valuation suggests it’s not a bargain.
🔹 Trailing P/E: 25.26, a fair valuation given its growth
🔹 Forward P/E: 26.18, indicating expectations for continued earnings expansion
🔹 PEG Ratio: 1.75, suggesting reasonable growth relative to valuation
🔹 Price-to-Sales: 6.60, on the higher end but in line with strong profitability
The stock has traded between $355.12 and $536.84 over the past year and currently sits at $449.04, near the middle of that range. With a beta of 1.25, Kinsale is slightly more volatile than the overall market, but not excessively so. The 50-day and 200-day moving averages are both around $445, suggesting that the stock is in a stable holding pattern rather than being overbought or oversold.
Risks and Considerations
While Kinsale is a strong company, there are a few risks investors should be aware of.
- Valuation Concerns – The stock isn’t cheap. If growth slows, its premium valuation could compress, leading to a potential price decline.
- Insurance Market Cyclicality – The insurance industry tends to be cyclical, and while Kinsale operates in a growing segment, economic downturns or increased competition could impact profitability.
- Interest Rate Sensitivity – Higher interest rates can affect the investment income of insurers. However, Kinsale’s strong underwriting profitability helps offset this risk.
- Low Dividend Yield – For investors focused on income, Kinsale’s 0.15% yield might not be attractive. The real value lies in potential dividend growth rather than immediate cash flow.
Despite these risks, Kinsale’s financial discipline, strong underwriting model, and growth trajectory make it a well-managed company with solid long-term potential.
Final Thoughts
Kinsale Capital Group is a growth-first dividend stock. If you’re looking for high current income, this isn’t the best option. But if you’re interested in a high-quality business that rewards shareholders through both dividend growth and price appreciation, Kinsale offers a compelling case.
The low payout ratio, strong free cash flow, and disciplined management suggest plenty of room for future dividend increases. While the yield is small today, the potential for compounding makes this an attractive choice for long-term investors who prioritize both stability and growth.
For those willing to be patient, Kinsale has the potential to develop into a strong dividend payer over time.
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