Updated 3/11/25
MTG Investment Corporation is a well-established player in the mortgage insurance industry, helping lenders provide financing to homebuyers who can’t make a large down payment. As a key part of the housing market, the company has built a solid business that generates strong profits and free cash flow.
For dividend investors, MTG may not be the first name that comes to mind, but it offers a compelling mix of income potential and long-term stability. The company has been consistent in returning capital to shareholders while keeping its payout ratio low, leaving plenty of room for future growth.
Investors looking for a steady dividend payer with a strong financial foundation may find MTG worth considering. Let’s take a deeper look at its dividend, financials, and valuation to see how it fits into an income-focused portfolio.
Key Dividend Metrics
📈 Dividend Yield: 2.24%
💰 Annual Dividend Per Share: $0.52
📆 Most Recent Dividend Date: March 5, 2025
📉 Ex-Dividend Date: February 18, 2025
🔄 5-Year Average Dividend Yield: 2.23%
📊 Payout Ratio: 16.96% (Plenty of room for increases)
🚀 Dividend Growth Potential: Strong, thanks to low payout and solid free cash flow
Dividend Overview
MTG’s dividend yield currently sits at 2.24%, which is in line with its five-year average. While it’s not the highest-yielding stock out there, it offers consistency and security, which many income investors value.
One of the most attractive things about MTG’s dividend is its payout ratio, which is just under 17%. This means the company is only paying out a small portion of its earnings as dividends, leaving plenty of room for future increases. A low payout ratio is usually a sign that a company can sustain its dividend even during economic downturns.
Another thing to keep in mind is MTG’s approach to shareholder returns. While some companies prioritize dividend hikes, MTG has focused more on stock buybacks. This can boost share prices over time but means dividend growth might not be as aggressive as some investors would like.
Dividend Growth and Safety
Looking at MTG’s dividend history, it has been stable with modest growth over time. The company takes a conservative approach, ensuring that it maintains a strong financial position rather than chasing big dividend hikes.
With a low payout ratio and solid cash flow, the dividend appears very safe. The company is highly profitable, with a profit margin of over 63%, and its operating cash flow remains strong. As long as earnings remain steady, there should be no risk to the dividend.
Growth potential is another story. Since MTG prioritizes buybacks, dividend increases may not be as frequent or substantial as some income investors prefer. However, with earnings expected to remain strong, there is still room for the dividend to grow gradually over time.
Chart Analysis
The chart for MTG shows some key technical movements that dividend investors should take note of. While the stock has had a strong run over the past year, recent price action suggests some potential shifts in momentum. The interaction between moving averages, volume trends, and relative strength gives a clearer picture of what’s happening beneath the surface.
Moving Averages and Trend Direction
The 50-day moving average (orange line) has recently crossed below the 200-day moving average (blue line), forming what’s commonly known as a death cross in technical analysis. This can be a bearish signal, suggesting that short-term momentum is weakening compared to the longer-term trend.
Over the past several months, MTG’s stock had been in a steady uptrend, riding the 50-day moving average as support. However, since peaking near the $26 range, it has struggled to hold its gains and has now slipped below both moving averages. This suggests the trend is at a critical juncture, and how the stock reacts around these levels will be important.
Support and Resistance Levels
There’s some clear price support forming around the $23 level, which has acted as a floor for recent price action. If the stock continues to hold above this zone, there’s a chance it could consolidate and build a base for another move higher. On the other hand, a breakdown below $23 could open the door for further downside, possibly testing levels closer to $22 or lower.
The previous highs near $26 will act as resistance if the stock starts moving back up. A decisive break above that level would signal renewed strength and could attract more buying interest.
Volume and Market Participation
Volume has been relatively moderate, with no extreme spikes recently. However, looking at past trends, volume tends to pick up when the stock makes significant moves, such as the large red bars seen during October’s pullback. This means that if there’s a move in either direction, a surge in volume could confirm the validity of that move.
Lower volume during the recent decline suggests there isn’t an overwhelming rush for the exits just yet. If selling pressure increases with higher volume, it would be a stronger bearish signal.
Relative Strength Index (RSI) and Momentum
The RSI at the bottom of the chart shows that momentum has been cooling off, but it hasn’t quite reached the oversold zone. This suggests that while the stock has lost some steam, there’s still room for further downside before it becomes oversold.
Previously, the stock has rebounded when RSI dipped near these levels, so watching for any signs of reversal in momentum could be key. If RSI starts turning up while the stock holds its support zone, it could indicate that buyers are stepping back in.
Analyst Ratings
📈 Upgrades
🔹 On June 3, 2024, Keefe, Bruyette & Woods upgraded MTG from Hold to Buy, adjusting the price target from $24 to $25. This upgrade was driven by the company’s strong financial performance and favorable market conditions. Analysts pointed to MTG’s solid earnings growth, improved underwriting margins, and a stable housing market as key reasons for the improved rating.
📉 Downgrades
🔻 On December 9, 2024, Bank of America downgraded MTG from Buy to Underperform, lowering the price target from $26 to $25. The downgrade was based on concerns about potential headwinds in the mortgage insurance industry, including rising interest rates and potential declines in mortgage origination volumes. Analysts also expressed caution about the long-term sustainability of profit margins if the economic environment softens.
🔻 Similarly, on December 10, 2024, Keefe, Bruyette & Woods revised its stance on MTG, moving the stock from Outperform to Market Perform. The decision was influenced by valuation concerns, as the stock had already appreciated significantly over the past year, potentially limiting future upside.
🎯 Consensus Price Target
The current 12-month consensus price target for MTG sits at $26.75, indicating a potential upside of about 13% from current levels. Analysts’ estimates range between $25 and $30, reflecting mixed views on the company’s growth prospects. Some remain optimistic due to strong financials and cash flow, while others worry about macroeconomic pressures that could weigh on the mortgage insurance sector.
These contrasting ratings reflect a balanced outlook on MTG, with some analysts seeing it as an undervalued opportunity and others remaining cautious about future risks.
Earnings Report Summary
MGIC Investment Corporation (MTG) wrapped up the fourth quarter of 2024 on a strong note, delivering solid numbers that highlight its steady growth in the mortgage insurance industry. The company managed to boost earnings, grow its insurance portfolio, and maintain strong financial health despite some challenges in the broader economy.
Steady Profit Growth
MTG reported net income of $184.7 million for the quarter, translating to $0.72 per share. That’s a noticeable increase from the $0.66 per share it posted in the same period last year. Adjusted net operating income came in at a similar $184.5 million, or $0.72 per share, showing a steady upward trend.
Revenue on the Rise
Total revenue climbed to $301.4 million, up about 6% from the previous year. The main drivers behind this growth were higher net premiums earned, which increased to $241.3 million, and a bump in net investment income, reaching $61.3 million. Both of these gains suggest that demand for mortgage insurance remains healthy, and the company is making smart investment moves to keep cash flowing.
Growth in Insurance Business
MTG’s total insurance in force—the value of all mortgages it insures—grew slightly to $295.4 billion. While that’s not a massive jump, it’s still a step in the right direction. New insurance written during the quarter was a standout, hitting $15.9 billion, a nearly 46% increase from the same time last year. That kind of surge signals strong demand and market confidence in MGIC’s services.
One metric that dipped slightly was the persistency rate, which measures how much of its insurance remains active. It landed at 84.8%, down a bit from 86.1% a year ago. While a small decline, it’s still within a strong range, showing that most policyholders are sticking with their coverage.
Managing Costs and Expenses
Like any business, MTG faced some rising expenses. Total losses and expenses for the quarter reached $66.7 million, up over 23% from the previous year. The loss ratio, which tracks how much the company pays out in claims, rose to 3.6% from a negative 4.2% last year. Despite these increases, MGIC improved its underwriting expense ratio, trimming costs and making operations more efficient.
The company’s financial health remains solid, with total shareholder equity rising to $5.3 billion, an increase of over 4% year-over-year. Book value per share climbed nearly 12% to $20.82, and total assets hit $6.7 billion. Debt levels stayed in check at $644 million, which keeps MGIC’s balance sheet looking strong.
MGIC also made sure to reward shareholders. It repurchased 7.8 million shares in the quarter, spending $193.3 million on buybacks. On top of that, it paid out $200 million in dividends to the holding company and distributed a quarterly dividend of $0.13 per share. Looking ahead, the board has already declared another $0.13 per share dividend for March 2025.
Overall, MGIC continues to show steady financial growth while maintaining a disciplined approach to risk. The strong earnings, rising revenue, and active shareholder returns all signal that the company is staying on track in an ever-changing mortgage market.
Financial Health and Stability
One of the biggest reasons MTG can confidently pay its dividend is its strong financial position.
- Profit margins are high, with a net margin of 63.18% and an operating margin above 80%. This means the company is generating a lot of profit from its revenue.
- Return on equity is nearly 15%, showing that the company is effectively using its capital.
- Debt is manageable, with a debt-to-equity ratio of just 12.5%. This is relatively low for a financial services company.
- Liquidity is solid, with a current ratio of 3.34, indicating that MTG has more than enough assets to cover its short-term obligations.
When you put all of this together, it’s clear that MTG is in great financial shape. It doesn’t rely heavily on debt, it’s highly profitable, and it generates strong cash flow. All of these factors point to a stable dividend with room for growth in the future.
Valuation and Stock Performance
Valuation
At its current price, MTG looks like a solid value play.
- The stock trades at a price-to-earnings (P/E) ratio of just over 8, which is significantly lower than the broader market.
- Its price-to-book (P/B) ratio is around 1.09, meaning it’s trading close to its book value.
- The enterprise value-to-revenue ratio is 5.01, which is reasonable for a financial stock.
These valuation metrics suggest that MTG is not overvalued and may even be trading at a slight discount. For investors looking for a dividend-paying stock with upside potential, this could be an appealing entry point.
Stock Performance
MTG’s stock has been relatively stable but has seen some pullbacks recently.
- The 52-week high is $26.56, while the current price is $22.96.
- The stock has dipped below its 50-day and 200-day moving averages, which could indicate a potential buying opportunity for long-term investors.
- The beta is 1.28, meaning the stock is slightly more volatile than the overall market.
Although the stock has pulled back from its highs, its fundamentals remain strong. For investors with a long-term view, the current price could offer a good entry point.
Risks and Considerations
Sensitivity to the Housing Market
As a mortgage insurance company, MTG’s business is closely tied to the housing market. If the housing sector experiences a slowdown or defaults start to rise, it could impact earnings. However, the company has weathered past cycles well and has taken steps to mitigate risks.
Regulatory Challenges
The mortgage insurance industry is heavily regulated, and any policy changes could affect MTG’s operations. While this isn’t an immediate concern, it’s something investors should keep an eye on.
MTG has focused more on buybacks than dividend increases, which may not align with every income investor’s goals. While buybacks can support share prices, some investors prefer companies that prioritize consistent dividend growth.
Market Volatility
The stock has a beta of 1.28, meaning it’s slightly more volatile than the broader market. While this isn’t extreme, it’s something to consider for investors who prefer lower-risk dividend stocks.
Final Thoughts
MTG may not be the first stock that comes to mind for dividend investors, but it has a lot to offer. Its dividend is stable, well-covered by earnings, and has room for growth. The company is financially strong, with high profitability and low debt, making it a solid long-term play.
While dividend growth may not be rapid, MTG provides a balance of income and value, making it an attractive option for investors looking for a reliable, financially sound company in the mortgage insurance space. With the stock currently trading at a reasonable valuation, it could be an appealing addition to a dividend-focused portfolio.
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