Mony is now a dividend stock

In the past two years, Mony Group’s (MONY) dividend yield has risen from 5 per cent to 8 per cent, and its forward price/earnings ratio is down from 15 to 8. Yield is obviously a function of the marketplace, but there was a time when the Moneysupermarket price comparison website owner was seen as a technology company; now it is being valued like a utility.

The falling share price partly reflects the weakening car insurance market. In the aftermath of the pandemic, used car prices and repair costs spiked, as did premiums, but they have been falling since. Insurance makes up just over half of Mony’s revenue, and compared with last year car premiums are down 9 per cent. As a result, total insurance revenue dropped 1 per cent.

Management is confident this deflation is “easing” so Mony could be nearing the bottom of the cycle. However, a new threat is emerging. The rise of AI agents that can automatically compare prices across the internet are threatening the model. In response, Mony has launched a MoneySuperMarket tool that can be accessed through the ChatGPT app.  

Broker Investec believes the sell-off has been overdone. It doesn’t think users will feel confident putting their financial information into an independent chatbot. Instead, Investec says OpenAI will become a “new traffic source” to the Mony website. Given the dividend yield, it sees this as a “highly attractive entry point”.  

In the long term it is easy to envision a world without price comparison websites, but in the short term Mony’s brand gives it a lot of protection. Habits take a while to change. If insurance premiums start rising then this will also be a boost to the business. Buy.

Last IC View: Buy, 204p, 21 Jul 2025