CNA Financial: A Strong Investment Choice with Resilience and Growth

CNA Financial (NYSE:CNA) offers a compelling investment opportunity with a 7.5% dividend yield, a robust 23% annual payout growth, and consistent 17% annual returns, while exhibiting a volatility level similar to the S&P 500. If CNA isn’t part of your portfolio, you may be missing a valuable asset!

As a property and casualty insurance company, CNA has shown remarkable growth and stability in the post-COVID landscape. While it stands out as a solid investment, those seeking lower volatility and consistent returns should also consider the High-Quality Portfolio, which has outperformed the S&P 500, achieving returns over 91% since its inception.

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Attractive Financial Metrics

• 7.5% dividend yield with an annual growth rate of nearly 23%
• Impressive revenue growth exceeding 6%, along with nearly 20% operating cash flow margin
• Nearly 17% annualized return, outperforming the S&P over the last five years
• Annualized volatility around 22%, comparable to the S&P’s 18%; most high-performing stocks show nearly double the volatility
• Affordable valuation with a price-to-earnings (P/E) ratio slightly above 14

Further illustrating its resilience, CNA delivered +3.8% returns in 2022 amidst a market downturn of nearly -19%. This trend persists, as CNA has achieved a +3.3% increase (as of April 11, 2025), while the broader market is down -9%.

Factors Behind CNA’s Performance

CNA has capitalized on the opportunity to invest new premiums into higher-yield bonds, contributing significantly to its profit margins. Moreover, the company has effectively raised premiums across its commercial and specialty lines. As inflation has increased replacement and repair costs, CNA, like its peers, has responded by repricing policies. Thus, CNA remains a defensive stock, showing less correlation with speculative sectors.

Understanding the Risks

While CNA presents solid investment opportunities, it is not without risk. During the COVID-19 pandemic, CNA’s stock price fell nearly -27% in one month compared to the S&P 500’s -12% drop. Additionally, CNA underperformed the S&P in 2018. However, since then, CNA has adapted well to the post-COVID environment and benefitted from increased premiums. It’s crucial to note that while tariffs may not impose direct risks, indirect risks can arise if businesses face diminished sales and opt to scale back on premiums.

Investing in individual stocks carries inherent risks. For greater diversification, consider Trefis’ High-Quality Portfolio, which consists of 30 stocks and has a proven track record of outperforming the S&P 500 over the last four years. What makes this portfolio attractive? It has consistently delivered better returns with lower risk compared to the benchmark index, resulting in a smoother performance as indicated by its metrics.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.