Equitable Holdings' Dividend Surge: A Safe Bet in Uncertain Times?

The insurance sector has been a rollercoaster lately, but one name is standing out with a bold move that could reward shareholders for years: Equitable Holdings (EQH). The company just announced a dividend hike—a 25% jump from $0.24 to $0.27 per share—amid mixed earnings trends. Is this a risky bet, or a golden opportunity? Let's dig in.

First, the dividend increase isn't just a gimmick. It's backed by a fortress balance sheet, with a combined NAIC RBC ratio of 425%—a staggering 25% above its target range. This isn't just strong; it's bulletproof. Pair that with $1.1 billion in holding company liquidity (more than double its minimum target) and you've got a company that can weather any storm.

But here's the kicker: this dividend isn't static. Management is planning to repurchase an additional $500 million in shares once its RGA life reinsurance deal closes, freeing up over $2 billion in capital. That's not just shareholder-friendly—it's a clear signal that EQH is laser-focused on returning value.

Now, let's address the elephant in the room: the mixed earnings. GAAP net income for Q1 2025 came in at $63 million, but that's a misleading snapshot. Look deeper: non-GAAP operating earnings were $421 million, and they're already deploying capital strategically—like sinking $760 million into AllianceBernstein and buying back shares. The key takeaway? EQH isn't just surviving—it's positioning itself for growth.

Critics will point to the low GAAP figure, but that's missing the bigger picture. The RGA deal, expected to close mid-2025, will slash mortality risk exposure by reinsuring 75% of its life insurance block. That means less volatility, more capital, and a clearer path to sustain dividends and grow them.

Let's crunch the numbers: the current dividend of $0.27 per share sits comfortably within EQH's 60-70% payout ratio. With $2.2 billion in cash and liquid assets (excluding AllianceBernstein's $160 million credit facility), they've got room to maneuver. And don't forget—the company just returned $335 million to shareholders in Q1 alone, a mix of dividends and buybacks that shows confidence in its cash flow.

The skeptics are right about one thing: earnings have been uneven. But here's why that's irrelevant: EQH isn't a growth-at-all-costs company. It's a capital return machine. Even if GAAP earnings stay muted, the dividend is safe—and the RGA deal's capital boost could supercharge future hikes.

Bottom Line: EQH is a dividend stock with rare durability. It's not just surviving—it's thriving. With a fortress balance sheet, a clear path to capital returns, and a dividend that's set to grow, this isn't a gamble. It's a strategic buy for investors who want income and stability in shaky markets.

Action Alert: Don't let short-term noise cloud the big picture. EQH's dividend isn't just sustainable—it's a launchpad for future gains. If you're looking for a dividend stalwart with growth legs, this is your play.

Note: Always conduct your own research and consult with a financial advisor before making investment decisions.