Monday, March 24, 2008

Buying More Universal Insurance Holdings, Inc.

I've been a fan of Universal Insurance (UVE) for quite a while now. I've held shares in my portfolio as a long term investment. With the most recent drop in the stock market, their numbers have become even more attractive. While regulatory changes in the Florida insurance market have had an impact on the company's gross premiums written, I believe their expansion plans and recent actions taken to implement those plans will more than balance out any temporary setbacks.

With the current price, as of this posting, of $3.38 the stock is selling near their 52 week low, allowing for a lot of room for price appreciation. The decreased price per share also makes their dividend yield of 8% much more attractive. Since this 8% yield represents only a 15% payout ratio, the company is retaining plenty of earnings for future expansion. Add to this a return on equity of 69.30% and it looks to be a fantastic investment opportunity.

With all this in mind, I've put in an order to purchase additional shares for my portfolio. This will lower my average price per share for my total investment in UVE and at the same time increase my overall dividend yield. It will also put me in a better position to benefit from future capital gains as the price per share increases. So I'll continue to monitor their progress and provide updates from time to time on how this investment is working out.

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