The Dividend Achievers are a group of solid dividend stocks with 10+ years of consecutive dividend increases.
200+ shareholder-friendly companies present many potential investment opportunities. However, not all of these businesses will make a compelling investment at any given time. Some will be overvalued, while others will be undervalued.
American Equity Investment Life Holding Company (AEL) is currently the Dividend Achiever with the most attractive valuation, based on an average index of price-to-earnings, price-to-book, and price-to-cash-flow ratios.
Since the company is trading at such an attractive valuation, it is likely that it will make a rewarding investment moving forward.
This article will analyze the investment prospects of American Equity Investment Life in detail.
Business Overview
American Equity Investment Life Holding Company operates in the development, marketing, issuance and underwriting of annuities and life insurance products in the United States.
The company operates through two operating subsidiaries:
Altogether, American Equity Investment Life’s insurance is delivered to customers through 35 national marketing organizations and 25,000 independent insurance agents.
Details about the company’s business model can be seen below.
Source: American Equity Investment Life March 2017 Financial Overview, slide 4
American Equity Investment Life benefits from being a leader in its industry.
The company has been a top 3 fixed index annuity producer by annual sales for 16 out of the past 17 years and has a focus on recruiting and marketing insurance agents that sell more than $1 million in annual premiums.
American Equity Investment Life also has a conservative investment portfolio for its float, with 89% of the firm’s capital invested in high-quality fixed income instruments.
Source: American Equity Investment Life March 2017 Financial Overview, slide 5
By and large, American Equity Investment Life’s ‘golden goose’ is fixed index annuities, which compose 95.5% of its total account value.
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