Wall Street Insiders Are Loading Up on These 3 Dividend Aristocrats

Every earnings season, the headlines trumpet what analysts expect. But the filings related to insider trades that most skim right past are genuinely valuable and give you an edge over the average investor. Insider buying is the best barometer you can use to judge how bullish or bearish a company’s management is.

Multiple studies have shown that following insider portfolios is a good way to beat the market. A 2024 study by Michigan Ross says insiders can beat the market by up to 20%. According to BBAE, insiders have also historically outperformed by 11% per year vs. the S&P 500’s average.

Hence, when the people who know the balance sheet start backing up the truck, the odds of future outperformance jump dramatically. Plus, if the stocks have solid underlying businesses with great cash flows, this also gives you a good cushion if things don’t turn out well.

Here are the three stocks with both insider conviction and dividend durability. We are using data from Nasdaq.

UnitedHealth (UNH)

UnitedHealth (NYSE:UNH) is a Dividend Aristocrat trading at 2018 prices after a slew of unfortunate events that caused it to plunge. The December assassination of CEO Brian Thompson rattled investors and triggered an internal succession scramble, followed immediately by a rare 1.2% earnings miss in Q1, a guidance withdrawal, and the group’s CEO resigning.

However, none of these events is going to crack the moat. This company is still the biggest U.S. health insurer and a cash cow.  Medicare Advantage rate cuts that could impact margins, and no one can predict another negative catalyst, but UNH stock is too cheap to ignore.

The earnings miss and the CEO resignation are already priced in. If UnitedHealth returns to its original trajectory by beating estimates in Q2 (goes out on July 29), it could quickly rebound.

Insiders seem to agree that the pessimism is overdone. Filings from early June show multiple directors purchasing shares on the open market. In the past three months, there have been 30 open market buys against just 7 open market sales.

Things look even better if you look at volume. Insiders snapped up 114,208 shares in the past three months and only sold 4,217.

None of this guarantees a straight line higher, but in a market starved for quality at a discount, UNH looks like the best prescription available for juicy long-term returns. UNH stock currently gives you a 3.12% yield at a 36.05% payout ratio. There have been over 16 consecutive years of dividend increases.

Brown & Brown (BRO)

Brown & Brown (NYSE:BRO) has been one of the most consistent performers in the stock market, but it has fallen over 12% from April prices. It is also an insurance company that provides risk management solutions to businesses and individuals.

Investors digested the January 27 earnings report that was, paradoxically, both strong and disappointing. Revenue surged 15% to $1.2 billion, while adjusted EPS growth came in at 25%. Still, headline EPS fell 22% to $0.73 and full-year operating expenses went up tied to the company’s never-ending string of tuck-in acquisitions. The most recent one is Accession Risk Management Group, Inc., for $9.8 billion.

Insiders think the market has over-corrected and are buying up shares. In the past three months, there have been 11 open market buys, compared to just one sale.

13,948 shares were bought vs. just 2,226 shares sold. It’s a much thinner order book compared to the one above, but it still shows that insiders have conviction here.

BRO stock comes with a 0.58% dividend yield and a payout ratio of 12.61%. It has increased its dividends for 31 consecutive years.

Franklin Resources (BEN)

Franklin Resources (NYSE:BEN) is a global investment management company. The stock slid from the mid-$50s in 2015 to $16.66 this summer. It erased two decades of price appreciation and left income investors wondering whether the 45-year dividend-raise streak was finally living on borrowed time. Thankfully, shares are up 22.4 % year-to-date through mid-July, and insiders are opening their wallets.

In the past three months, there have been 4 open market buys vs. 3 sales, but the volume is very bullish here. Directors and officers bought 1,603,765 shares and only sold 26,259. The CEO has been routinely buying shares in recent months..

Franklin still manages the iconic Templeton and Franklin mutual funds, but it has spent the last four years gobbling up higher-fee alternative shops. Collectively, these moves push the firm’s mix toward private credit, real estate, and secondaries strategies that have higher management vs. blended fees on legacy long-only funds. Long-term net outflows were $26.2 billion, but if you exclude the legacy business, it turns into net inflows of $7.4 billion. Long-term inflows rose 9% sequentially. A real turnaround seems to be in play.

BEN stock now pays a 5.26% dividend yield with a 52.28% payout ratio. It has been raised for 45 consecutive years.

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