Why Is CNA Financial Not In Your Portfolio?

Tariffs don’t matter to this stock – it pays you a 7.5% dividend, grows that payout by 23% a year, crushes the S&P with 17% annual returns – and does it all with the similar volatility as the index. If CNA Financial (NYSE:CNA) isn’t in your portfolio, you’re leaving money on the table! 

CNA is a property and casualty insurance company that has demonstrated remarkable resilience and growth in the post-COVID era. While it is a solid stock, if you want even lower volatility while maintaining the upside, consider the High-Quality portfolio, which has outperformed the S&P 500 and achieved returns greater than 91% since inception. 

Image by Steve Buissinne from Pixabay

Look At These Numbers And Tell Us You Won’t Buy It Today

• 7.5% dividend yield growing at rate of nearly 23% annually
• >6% revenue growth which is impressive considering the all-weather nature of the stock, with nearly 20% operating cash flow margin
• Nearly 17% annualized return, beating S&P in the last 5 years
• Annualized volatility of nearly 22%, about as good as S&P’s 18% – most high performing stocks are almost 2x volatile
• And all this is available at a cheap price, with PE of just over 14

And if that’s not enough to convince you, consider this: CNA returned +3.8% in 2022 when the entire market tanked nearly -19%. And to prove that it wasn’t a one-time thing, it has repeated the same impressive feat this year. While entire market is down -9%, CNA is up +3.3% (as of 11th Apr 2025)

Why Has CNA Been So Good?

P&C insurers like CNA have benefited from investing new premiums at higher yields in bonds – and this investment income is a meaningful chunk of its profits. In addition, the company has successfully managed to raise premiums across commercial and specialty lines. As inflation drove up replacement and repair costs, insurers like CNA were quick to reprice policies. In short, CNA stock is defensive and less correlated to some of the more speculative sectors of the market. 

Does This Mean No Risk? 

Absolutely Not. In fact, when Covid hit, CNA stock price dropped nearly -27% in a single month vs -12% for S&P 500. It also underperformed S&P in 2018. However, the story has been different in the post-Covid period. Built to handle uncertainty, P&C insurers like CNA have seen an uptick in premiums. Additionally, while there is no direct risk from tariffs, indirect risks exist if businesses lose sales and downsize, resulting in scaling down of premiums.

There always remains a meaningful risk when investing in a single, or just a handful of stocks. Consider Trefis High Quality (HQ) Portfolio which, with a collection of 30 stocks, has a track record of comfortably outperforming the S&P 500 over the last 4-year period. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride as evident in HQ Portfolio performance metrics.