Title insurerFirst American Financial (
) is sharing the bounty it's received from the real estate
The company on Oct. 25 boosted its quarterly dividend by 50%
to 12 cents a share. That brought the annualized dividend yield
to 2%, roughly in line with the S&P 500's average. The latest
dividend is payable Dec. 31 to shareholders of record Dec.
Meanwhile, the stock has soared 87% this year, far outpacing
the S&P's 12% gain.
First American provides title insurance for commercial and
residential properties. Profit for the latest quarter soared
375%, the third straight triple-digit increase. It was driven
primarily by a boom in mortgage loan refinancing and strength in
its commercial business. Revenue for the quarter climbed 25%,
accelerating for the second straight quarter.
Yet the recent rebound in profit and revenue partly reflects
easy comparisons to year-ago levels, when profit weakened.
The stock has a best-possible 99 Earnings Per Share Rating,
but its three-year Earnings Stability Factor is a worst-possible
99. The discrepancy reflects the company's volatile earnings
history amid the housing sector's wild ride in recent years.
First American cited "increasing confidence in the outlook for
the housing and mortgage markets" as a reason for raising its
So it's important to see if the company can maintain brisk
The stock is currently rising along with its 50-day moving
average, sketching a flat base with a possible buy point at
Institutional investors have boosted their holdings of the
stock for two straight quarters.
But the stock's Accumulation-Distribution Rating has fallen to
a neutral C, and the up-down volume ratio has dipped below the
neutral 1.0, indicating that big funds may be turning cool to the
Furthermore, First American's
Insurance-Property/Casualty/Title industry group has fallen from
No. 26 six weeks ago to a lowly 118th place out of 197 in
Friday's IBD. And the insurance sector was ranked just 19th out