Travelers: A 2022 Outperformer With A Big Total Shareholder Yield (NYSE:TRV)

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The S&P 500 was down 24% for 2022 at the June low. After the worst start to a year since 1970 for the U.S. large-cap index, investors are left searching for any kind of relative strength.

S&P 500 Returns And Drawdown By Year: The 2022 Bear

S&P 500 Returns and Drawdown By Year: The 2022 Bear

J.P. Morgan Asset Management

One niche that has steadily and stealthily outperformed are insurance stocks. The Invesco KBW Property & Casualty Insurance ETF (KBWP) is red-hot when compared to the S&P 500 this year.

KBWP P&C Insurance ETF Vs. SPY: An Industry With Momentum

KBWP P&C Insurance ETF vs SPY: An Industry with Momentum

Within the fund’s portfolio, you will find a household insurance company: Travelers (NYSE:TRV). The stock is an 8% holding in KBWP as of July 1. So far this year, TRV has returned more than 10% – that is a whopping total return considering the S&P 500 SPDR Trust ETF (SPY) is down 19% while the Select Financials Sector SPDR ETF (XLF) is down 18%. Moreover, Travelers has beaten KBWP by more than 6% YTD. Talk about momentum.

TRV Is Outperforming The Industry, Sector, And Market ETFs

TRV Is Outperforming the Industry, Sector, and Market ETFs

But what does Travelers do? Is it a decent fundamental investment? Let’s review the details. According to Bank of America Global Research, TRV is a large, diversified property & casualty insurer deriving a mix of business from commercial and personal lines, particularly in the U.S., largely sourced through independent agents. Its commercial business tends to be tilted toward small business and middle market risks, while its personal lines business aims to sell bundled home/auto policies. The company has a long track record of returning to shareholders almost all the capital it generates through dividends and repurchases.

The $41 billion market cap New York-based Financials sector company trades at a low 11.6x forward P/E ratio. According to The Wall Street Journal, its dividend yield of 2.17% is solidly above that of the S&P 500.

S&P 500 Forward P/E Multiple Heat Map: Travelers A Compelling Value Stock

S&P 500 Forward P/E Multiple Heat Map: Travelers A Compelling Value Stock


BofA analysts expect TRV earnings to grow at a fast clip next year and in 2024 after a speed bump this year. Based on figures from last December, the stock’s P/E ratio should decline based on that earnings growth while a steady dividend yield is seen. Within the April 19 first-quarter earnings report, the company raised its dividend by 3.5% and announced a $5 billion share repurchase program.

TRV Earnings, P/E, Dividend Yield Forecasts

TRV Earnings, P/E, Dividend Yield Forecasts

BofA Global Research

According to Koyfin Charts, Travelers’ buyback yield now exceeds 5%. Coupled with a dividend rate above 2%, total shareholder yield is an impressive 7.2%.

TRV Buyback Yield > 5%

TRV Buyback Yield > 5%

Koyfin Charts

Looking ahead, TRV’s next earnings report is confirmed to take place on Thursday, July 21, BMO, according to corporate events’ data provider Wall Street Horizon. The company hosts a conference call later that morning.

Travelers Corporate Event Calendar: An Early-Season Report On July 21

Travelers Corporate Event Calendar: An Early-Season Report on July 21

Wall Street Horizon

The Technical Take

Turning to the charts, TRV has a bullish look. Notice in the 2-year zoom below that shares have support at $163, but dipped below that key price in June. That’s a bullish false breakdown. Technicians like to quip, “from false moves come fast moves in the opposite direction.” And that held true recently as the stock surged above $170 in short order. I see resistance at a downtrend line off the March high and May rebound peak. Keep $180 and $188 on your radar for resistance, too. Still, awesome relative strength and a chart in an uptrend are impressive features.

TRV: Bullish False Breakdown, Consolidating Off The Q2 High

TRV: Bullish False Breakdown, Consolidating Off the Q2 High

The Bottom Line

Travelers looks good here. The stock is cheap and the total shareholder yield is massive. Technically, incredible relative strength this year makes this name a rare momentum stock that’s also good on its own.

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