Stewart Information Services: A Dividend Anchor in Volatile Waters

The real estate market's slow recovery has tested many companies, but Stewart Information Services (NYSE: STC) stands out as a rare income stalwart. Despite a Q1 2025 EPS miss and margin pressures, its 23-year dividend streak and fortress-like balance sheet ($320 million cash, current ratio 1.65) position it as a compelling buy for income investors. With shares near fair value and a June 30 dividend payout looming, the time to act is now.

Dividends: A Foundation of Trust

Stewart's dividend yield of 3% may not be the highest, but its consistency is unmatched in the title insurance sector. Over two decades, the company has delivered uninterrupted quarterly payments, even through housing crashes and regulatory turbulence. This streak isn't luck—it's a deliberate policy fueled by $1.4 billion in stockholders' equity and a business model that generates predictable cash flows.

The Q1 2025 results, while disappointing on EPS ($0.25 vs. $0.35 estimates), revealed $608.9 million in adjusted revenue, a 10.1% jump from 2024. Revenue growth, not just earnings, is the true driver of Stewart's dividend health. With a cash conversion cycle of 90 days and minimal debt, the company can weather short-term margin headwinds.

Valuation: A Discounted Dividend Machine

Stewart trades at 13.2x trailing 12-month earnings, near its five-year average, despite a 22% decline in Real Estate Solutions margins this quarter. Compare this to industry peers like Fidelity National Financial (FNF), which trades at 14.8x earnings despite weaker balance sheet metrics. Stewart's $66.76 share price offers a margin of safety, especially if its commercial segment—up 39% in revenue—delivers on 2025's “double-digit growth” guidance.

Risks? Manageable with Strategic Focus

Critics will point to Texas's proposed 10% fee cut, which Stewart is challenging in court. But Texas represents only 15% of revenue, and the company has tools to offset this via fee adjustments and cross-selling. Meanwhile, the Title segment's 3.5% loss ratio—the lowest since 2019—suggests operational excellence.

The Bottom Line: Act Before the Record Date

Investors have until June 16 to secure the June 30 dividend. With shares yielding 3% and the company's $200 million credit line providing a liquidity cushion, this is a low-risk entry point. If Stewart's commercial and international segments hit their growth targets, a re-rating to 15x earnings could add 13% to the stock price.

The Q1 EPS miss is a speed bump, not a roadblock. For income-focused investors, Stewart offers a rare blend of stability, dividend credibility, and upside potential. Don't let this dividend anchor sail away.

Action Item: Buy STC before June 16 to lock in the dividend. Monitor the Texas fee litigation closely—success there could be a catalyst for a 20%+ rally in 2026.