Definitive Analysis
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MGIC Investment Corporation (MTG)

Company Dividend Discount ModelIndustry: Insurance - SpecialtySector: Financial Services

Valuation Snapshot

Stable Growth$25.74 - $38.36$31.75
Multi-Stage$37.53 - $41.21$39.34
Blended Fair Value$35.54
Current Price$28.37
Upside25.28%
DecisionDon't Buy

Dividend History & Growth Metrics (10Y)

Metric5Y CAGR10Y CAGR2024202320222021202020192018201720162015
DPS25.50%0.00%0.540.510.460.390.340.170.000.000.000.00
YoY Growth--6.13%10.83%17.75%14.82%95.78%0.00%0.00%0.00%0.00%0.00%
Dividend Yield--2.17%2.31%3.41%2.86%2.44%2.72%0.00%0.00%0.00%0.00%

Stable Growth Model (Adjusted)

(USD in Millions except Per Share Data)
Net Income To Common (M)753.74
(-) Cash Dividends Paid (M)132.01
(=) Cash Retained (M)621.72
MetricLOWBASEHIGH
Required Retention Ratio20.0%12.5%7.5%
(=) Cash Required (M)150.7594.2256.53
Cash Retained (M)621.72621.72621.72
(-) Cash Required (M)-150.75-94.22-56.53
(=) Excess Retained (M)470.98527.51565.19
(/) Shares Outstanding (M)242.78242.78242.78
(=) Excess Retained per Share1.942.172.33
LTM Dividend per Share0.540.540.54
(+) Excess Retained per Share1.942.172.33
(=) Adjusted Dividend2.482.722.87
WACC / Discount Rate9.10%9.10%9.10%
Growth Rate-0.50%0.50%1.50%
Fair Value$25.74$31.75$38.36
Upside / Downside-9.25%11.91%35.21%

Multi-Stage Model: Projections

(USD in Millions)
MetricTTMDec-27Dec-28Dec-29Dec-30Dec-31Terminal
Net Income (M)753.74757.50761.28765.08768.90772.74795.92
Payout Ratio17.51%32.01%46.51%61.01%75.50%90.00%92.50%
Projected Dividends (M)132.01242.49354.06466.74580.54695.46736.22

Multi-Stage Valuation

MetricLOWBASEHIGH
WACC / Discount Rate9.10%9.10%9.10%
Growth Rate-0.50%0.50%1.50%
Year 1 PV (M)220.05222.27224.48
Year 2 PV (M)291.58297.47303.42
Year 3 PV (M)348.82359.44370.28
Year 4 PV (M)393.73409.79426.35
Year 5 PV (M)428.03449.98472.81
PV of Terminal Value (M)7,430.597,811.578,208.02
Equity Value (M)9,112.809,550.5210,005.36
Shares Outstanding (M)242.78242.78242.78
Fair Value$37.53$39.34$41.21
Upside / Downside32.30%38.66%45.26%

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