Updated on July 8th, 2025 by Felix Martinez
Cincinnati Financial (CINF) has a dividend track record that few companies can rival.
The company has increased its cash dividend for 65 consecutive years, making it one of just 16 stocks in the entire market with a dividend increase streak of at least 60 years.
That puts Cincinnati Financial among the elite of Dividend Kings, a small group of stocks that have increased their payouts for at least 50 consecutive years.
You can see the full list of all 55 Dividend Kings here.
You can also download an Excel spreadsheet with the full list of Dividend Kings (plus metrics that matter, such as price-to-earnings ratios and dividend yields) by clicking on the link below:
Dividend Kings have the longest track records of rewarding shareholders with rising dividends.
Cincinnati Financial has a relatively “boring” business model. However, insurance stocks are among the best options for long-term dividend growth investors. Cincinnati Financial stock has a 2.4% dividend yield, which is significantly above the ~1.3% average yield of the S&P 500 Index.
Thanks to its strong business model, healthy payout ratio, and robust balance sheet, the insurer has ample room to continue raising its dividend for many years to come.
Business Overview
Cincinnati Financial is a property and casualty (P/C) insurance company founded in 1950. It offers business, home, and auto insurance, as well as financial products, including life insurance, annuities, property, and casualty insurance. It is headquartered in Ohio and has a market capitalization of $22.9 billion.
The company has operations in 46 states. The company also has 2,196 agency relationships with 3,468 locations as of March 31st, 2025.
Source: Investor Presentation
Cincinnati Financial generates revenue as an insurance company in two primary ways. First, it earns income from the insurance premiums of the policies it sells to its customers.
Second, it also earns investment income by investing its float, i.e., the money it receives from its customers minus the amount it pays out in claims.
This is why the insurance business can be so lucrative — insurers generate a large amount of float, which can be invested at a high rate of return, thus generating compounded returns.
On the other hand, the P/C insurance business can be especially tricky for investors.
Some insurers are often tempted to reduce the premiums they charge to entice more customers and thus enhance their market share. During favorable years, in which catastrophic losses are low, these insurers post high profits.
However, a year with high catastrophic losses will inevitably emerge at some point and erase the profits of all the previous years if insurers have not followed a prudent underwriting policy.
This means that investors should evaluate P/C insurers based on their long-term performance.
Cincinnati Financial outperforms its peers in this respect. Over the last five years, the company has achieved a combined ratio that is 6.0 percentage points better (lower) than that of its peers.
Source: Investor Presentation
The combined ratio is the primary index of performance of P/C insurers, as it is the ratio of the amount of claims paid to the amount of premiums received. As this definition shows, the lower the combined ratio, the better.
Cincinnati Financial has managed to maintain a superior combined ratio thanks to the predictive modeling tools and analytics it uses as well as data management in order to determine the probability of each catastrophic event and thus set the appropriate price for each customer.
Cincinnati Financial’s superior underwriting policy is evident in its excellent combined ratio and exceptional dividend growth record.
As catastrophic losses are highly volatile in nature, they can be incredibly high in a few adverse years.
Consequently, it is nearly impossible for most insurers to grow their dividends during these few rough years.
Cincinnati Financial is a notable exception to this rule, having raised its dividend for 65 consecutive years. This is a testament to its prudent underwriting policy and management’s long-term perspective.
Another factor behind Cincinnati Financial’s exceptional dividend record is the healthy payout ratio, which the company has always targeted to create a wide margin of safety for its dividend.
Source: Investor Presentation
Thanks to its healthy payout ratio and financial strength, the insurer can continue to raise its dividend for many years.
Growth Prospects
In this business, a rough year every few years is expected. However, investors should focus on the long-term prospects of P/C insurers, and we believe that Cincinnati Financial’s future growth prospects are intact.
We expect 6% annual earnings-per-share growth over the next five years for Cincinnati Financial.
Management targets a 10% to 13% average annual growth rate over the next five years. As per its definition, the growth rate is equal to the growth rate of the book value per share plus the dividends paid to the shareholders.
It aims to achieve a 10% to 13% growth rate over the next five years, primarily via new agency appointments and premium growth in the already appointed agencies.
Source: Investor Presentation
Its market share remains low in the first five years after each agency’s appointment, but then it rises significantly, contributing to substantial premium growth.
On the other hand, the company generates a significant portion of its earnings from investment gains; therefore, it is vulnerable to prevailing interest rates and stock market performance.
Notably, Cincinnati Financial is a somewhat aggressive investor, with ~43.3% of its investment portfolio being invested in common equities.
Remarkably, 31.9% of its stock portfolio is invested in technology stocks. However, this is only slightly ahead of the weighting of the S&P 500, which holds 28.3% of its stocks in the technology sector. Cincinnati’s top equity holdings are Microsoft (MSFT), Broadcom (AVGO), JPMorgan (JPM), and UnitedHealth (UNH).
However, this strategy renders the company vulnerable to a potential bear market.
Competitive Advantages & Recession Performance
Cincinnati Financial boasts of its great relationships with most of its agents, which help the insurer earn access to the best accounts of its agents.
Additionally, it has a good reputation for its financial strength and efficient claim payment procedures, which provide a competitive advantage.
On the other hand, this competitive advantage is narrow. P/C insurance is characterized by intense competition, which has heated up more than ever in recent years.
Warren Buffett has repeatedly stated that the best days for insurers are behind them, due to the current intense competition. Moreover, Cincinnati Financial is vulnerable to recessions due to its high exposure to the stock market and its sensitivity to interest rates.
During recessions, interest rates remain depressed, which affects the yield of the insurer’s bond portfolio. However, Cincinnati Financial’s ability to generate strong cash flow and maintain profitability even during recessions has allowed it to raise its dividend for six decades.
Valuation & Expected Returns
We expect Cincinnati Financial to generate earnings per share of $5.50 this year. As a result, the stock is trading at a forward price-to-earnings ratio of 26.6, which is just ahead of our fair value P/E target of 20.0.
As a result, the stock appears to be overvalued at present.
If the stock reaches our fair level over the next five years, then multiple compressions will act as a 5.5% headwind to total returns over this period.
We also expect 6.0% annual EPS growth over the next five years, and the stock offers a dividend yield of 2.4%. Therefore, we estimate total returns at 2.9% per year over the next five years.
Final Thoughts
Cincinnati Financial is a high-quality P/C insurer. The company’s exceptional dividend record, with over six decades of annual increases, is a testament to its disciplined underwriting policy.
The stock is currently somewhat overvalued.
Despite the company’s qualities and the attractiveness of both the dividend yield and growth streak, we rate Cincinnati Financial as a hold due to its total return potential.
Additional Reading
The following databases of stocks contain stocks with very long dividend or corporate histories, ripe for selection for dividend growth investors.
- The Dividend Aristocrats List: S&P 500 stocks with 25+ years of dividend increases.
- The High Yield Dividend Aristocrats List is comprised of the 20 Dividend Aristocrats with the highest current yields.
- The Dividend Achievers List is comprised of ~350 stocks with 10+ years of consecutive dividend increases.
- The High Yield Dividend Kings List is comprised of the 20 Dividend Kings with the highest current yields.
- The Blue Chip Stocks List: stocks that qualify as Dividend Achievers, Dividend Aristocrats, and/or Dividend Kings
- The High Dividend Stocks List: stocks that appeal to investors interested in the highest yields of 5% or more.
- The Monthly Dividend Stocks List: stocks that pay dividends every month, for 12 dividend payments per year.
- The Dividend Champions List: stocks that have increased their dividends for 25+ consecutive years.
Note: Not all Dividend Champions are Dividend Aristocrats because Dividend Aristocrats have additional requirements like being in The S&P 500. - The Dividend Contenders List: 10-24 consecutive years of dividend increases.
- The Dividend Challengers List: 5-9 consecutive years of dividend increases.
- The Best DRIP Stocks: The top 15 Dividend Aristocrats with no-fee dividend reinvestment plans.
- The High ROIC Stocks List: The top 10 stocks with high returns on invested capital.
- The High Beta Stocks List: The 100 stocks in the S&P 500 Index with the highest beta.
- The Low Beta Stocks List: The 100 stocks in the S&P 500 Index with the lowest beta.
- The Complete List of Russell 2000 Stocks
- The Complete List of NASDAQ-100 Stocks