Critical Survey: CNO Financial Group (NYSE:CNO) vs. American International Group (NYSE:AIG)

American International Group (NYSE:AIG) and CNO Financial Group (NYSE:CNO) are both finance companies, but which is the superior stock? We will compare the two businesses based on the strength of their dividends, risk, analyst recommendations, profitability, institutional ownership, earnings and valuation.

Dividends

American International Group pays an annual dividend of $1.80 per share and has a dividend yield of 2.5%. CNO Financial Group pays an annual dividend of $0.68 per share and has a dividend yield of 1.7%. American International Group pays out 32.7% of its earnings in the form of a dividend. CNO Financial Group pays out 23.8% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. American International Group has raised its dividend for 3 consecutive years and CNO Financial Group has raised its dividend for 2 consecutive years. American International Group is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Valuation & Earnings

This table compares American International Group and CNO Financial Group”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
American International Group	$27.25 billion	1.45	-$1.40 billion	$5.50	13.34
CNO Financial Group	$4.45 billion	0.88	$404.00 million	$2.86	14.34

CNO Financial Group has lower revenue, but higher earnings than American International Group. American International Group is trading at a lower price-to-earnings ratio than CNO Financial Group, indicating that it is currently the more affordable of the two stocks.

Volatility & Risk

American International Group has a beta of 0.62, indicating that its stock price is 38% less volatile than the S&P 500. Comparatively, CNO Financial Group has a beta of 0.85, indicating that its stock price is 15% less volatile than the S&P 500.

Analyst Recommendations

This is a summary of recent ratings and price targets for American International Group and CNO Financial Group, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
American International Group	0	14	7	2	2.48
CNO Financial Group	0	1	4	0	2.80

American International Group currently has a consensus price target of $87.42, indicating a potential upside of 19.11%. CNO Financial Group has a consensus price target of $46.75, indicating a potential upside of 14.01%. Given American International Group’s higher possible upside, equities research analysts plainly believe American International Group is more favorable than CNO Financial Group.

Profitability

This table compares American International Group and CNO Financial Group’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
American International Group	11.89%	9.09%	2.32%
CNO Financial Group	6.64%	15.81%	1.06%

Insider & Institutional Ownership

90.6% of American International Group shares are owned by institutional investors. Comparatively, 95.4% of CNO Financial Group shares are owned by institutional investors. 0.6% of American International Group shares are owned by insiders. Comparatively, 3.4% of CNO Financial Group shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Summary

American International Group beats CNO Financial Group on 10 of the 18 factors compared between the two stocks.

About American International Group

American International Group, Inc. offers insurance products for commercial, institutional, and individual customers in North America and internationally. It operates through three segments: General Insurance, Life and Retirement, and Other Operations. The General Insurance segment provides commercial and industrial property insurance, including business interruption and package insurance that cover exposure to made and natural disasters; general liability, environmental, commercial automobile liability, workers’ compensation, excess casualty, and crisis management insurance products; and professional liability insurance. This segment offers marine, energy-related property insurance, aviation, political risk, trade credit, trade finance, and portfolio solutions, as well as operates reinsurance business; voluntary and sponsor-paid personal accident, and supplemental health products; and personal auto and personal property insurance. Its Life and Retirement segment offers individual retirement products, including variable, fixed index, and fixed annuities, as well as retail mutual funds; group retirement products comprising record-keeping, plan administrative and compliance services, financial planning, and advisory solutions; life insurance, including term and universal life insurance; and institutional markets products, which includes wrap products, structured settlement, pension risk transfer annuities, corporate and bank-owned life insurance, high net worth, and guaranteed investment contract products. It distributes its products through a network of brokers, agents, advisors, banks, and other distributors. The company was founded in 1919 and is headquartered in New York, New York.

About CNO Financial Group

CNO Financial Group, Inc., through its subsidiaries, develops, markets, and administers health insurance, annuity, individual life insurance, insurance products, and financial services for senior and middle-income markets in the United States. It offers Medicare supplement, supplemental health, and long-term care insurance policies; life insurance; and annuities, as well as Medicare advantage plans to individuals through phone, online, mail, and face-to-face. The company also focuses on sale of voluntary benefit life and health insurance products for businesses, associations, and other membership groups by interacting with customers at their place of employment. In addition, it provides fixed indexed annuities; fixed interest annuities, including fixed rate single and flexible premium deferred annuities; single premium immediate annuities; supplemental health products, such as specified disease, accident, and hospital indemnity products; and long-term care plans primarily to retirees and older self-employed individuals in the middle-income market. Further, the company offers universal life and other interest-sensitive life products; and traditional life policies that include whole life, graded benefit life, term life, and single premium whole life products, as well as graded benefit life insurance products. It markets its products under the Bankers Life, Washington National, and Colonial Penn brand names. The company was founded in 1979 and is headquartered in Carmel, Indiana.