First American Financial Raises Dividend 10.9% to $0.61

First American Financial Corporation raised its quarterly dividend 10.9% to $0.61 per share from $0.55. The shares traded ex-dividend on September 28, 2026, and the new rate sets the annual dividend at $2.44 per share.

Why the dividend changed

First American tied the increase to confidence in its business outlook and its commitment to returning capital to shareholders. Chief Executive Mark Seaton specifically cited improving market conditions, particularly in the commercial real estate market, in the company’s dividend declaration.

The latest operating results support that explanation. Second-quarter revenue rose 15% from a year earlier to $2.1 billion, while adjusted earnings reached $2.08 per share. Commercial revenue increased 34% to $314 million, and management said the commercial business was on pace for a record year. The Title Insurance and Services segment produced an adjusted pretax margin of 14.0%, despite what Seaton described as continued weakness in the residential market, according to the company’s second-quarter results.

The improvement was not uniform. Domestic direct title orders closed declined 1%, showing that residential transaction activity remained subdued. Investment income in the title segment increased 11% to $164 million, helping offset that weakness. First American also repurchased $20 million of stock during the quarter, placing the dividend increase within a broader program of capital returns. The evidence points to commercial growth, investment income and stronger profitability as the main support for the larger payout.

Management entered 2026 expecting a record commercial year, moderate purchase-market growth and a meaningful increase in refinancing activity. The second-quarter commercial performance was consistent with that outlook, although residential purchase volumes remained restrained. First American is also investing in artificial intelligence and proprietary technology to automate title work and improve operating efficiency, a strategy described in its full-year 2025 results and 2026 outlook.

Dividend track record

The increase extends First American’s dividend-growth streak to 14 consecutive years. Its full-year distribution rose from $1.78 per share in 2020 to $1.94 in 2021, a 9.0% increase, and then to $2.06 in 2022, a 6.2% increase. Growth moderated afterward: the annual total increased 1.9% in each of 2023, 2024 and 2025, reaching $2.18.

Recent quarterly payments show the same measured pattern before the latest step-up. The company paid $0.54 per share through December 2024, followed by $0.55 beginning in 2025 and continuing through June 2026. The move to $0.61 in September 2026 is therefore a larger increase than the recent annual pattern. Over five years, the dividend has recorded 4.4% annual growth.

Is the dividend covered?

First American’s dividend consumes 31% of earnings. That payout ratio means the company retains most of its earnings after funding the distribution, providing room to absorb ordinary fluctuations in title-insurance activity without requiring the dividend to consume the majority of profit.

SmarterDividends rates the dividend A with a safety score of 93. The grade means very safe, within the score range of 80-100. The rating is consistent with the 31% earnings payout ratio, the 14-year growth record and the stronger commercial results that management cited when explaining the increase. It does not remove the company’s exposure to real estate transaction volumes, investment income or claims experience.

Yield and valuation

At a share price of $64.72, First American’s forward yield is 3.68%. That is below the Financial Services sector median forward yield of 5.66%, so the shares provide less current dividend income than the sector median despite the larger quarterly payment. An investor holding 100 shares would receive annual dividend income of $244.00 at the new rate.

SmarterDividends estimates fair value at $96.20 and classifies the shares as undervalued, with 45% upside to fair value. The company has also recorded a 6.0% gain over one year. The valuation estimate is separate from dividend coverage: the yield reflects the current share price, while the safety assessment rests more directly on the payout ratio and operating capacity.

What to watch

The next quarterly report will provide the first major operating checkpoint after the increase. Commercial revenue, commercial order activity and the Title Insurance and Services segment’s margin will show whether the conditions cited by management remain in place. Residential closed orders also warrant attention because continued weakness would limit the benefit from any improvement in purchase and refinancing activity.

Investment income is another key measure because it contributed to second-quarter growth even after a decline in the federal funds rate. First American’s spending on artificial intelligence, title automation and related platforms will also affect expenses and operating leverage. Together, commercial demand, residential transaction volumes, investment income and technology spending will provide the clearest evidence on the earnings base supporting the $0.61 quarterly dividend.