Genworth MI Canada (TSX:MIC) is a private residential mortgage insurer. Shares have climbed 38.6% in 2019 as of mid-afternoon trading on September 27.
Genworth and other housing-linked stocks have flourished as the broader market in Canada has bounced back nicely in the spring and summer.
Home sales have rebounded in major Canadian markets while prices continue to increase. Sales have not climbed back to levels seen during the peak of activity in late 2016 and early 2017, but these levels appeared unsustainable at the time.
Bank of Montreal chief economist Douglas Porter declared early in September that the housing market was “basically (right) back on track.”
A jump in volumes is good for insurers, which is why Genworth deserves your attention as we look ahead to October.
In its second-quarter earnings report, Genworth reported a 12% increase in new insurance written from transactional insurance and a 12% jump in premiums written. Net income rose 13% from the prior quarter to $110 million.
Genworth stock has surged in 2019, but it still boasts a favourable price-to-earnings ratio of 11 and a price-to-book of 1.1.
The stock offers a quarterly dividend of $0.51 per share, representing a 3.9% yield. Genworth has achieved dividend-growth for 10 consecutive years.
A strong housing market will underpin its industry-leading insurance business as we look ahead to 2020. Investors who want exposure to the recovering housing market and some solid income should look hard at Genworth today.
