Disclosure: I do not currently hold AUB or SDF. This is general information only, not personal financial advice.
Insurance brokers are not usually the first place income investors look for dividends. They are not banks, they are not infrastructure stocks, and they do not have the headline yields of some listed credit funds or bank hybrids.
But the listed ASX insurance brokers are interesting because they sit in a useful middle ground. They collect fees and commissions from commercial insurance activity without taking the same underwriting risk as the insurers themselves. That makes AUB Group (ASX: AUB) and Steadfast Group (ASX: SDF) worth a closer look for investors who want a combination of income, dividend growth and exposure to a reasonably defensive industry.
Portfolio impact summary
| Question | AUB Group | Steadfast Group |
|---|---|---|
| Does it clear a 4% cash yield hurdle today? | No, not on current cash yield. | Yes, based on current dividend yield. |
| Dividend profile | Lower yield, better growth profile. | Higher yield, more immediate income. |
| Growth opportunity | Acquisitions, BizCover, international broking and underwriting agencies. | Large broker network, scale benefits, acquisitions and platform services. |
| Main income risk | Debt, acquisition execution and integration risk. | Debt, leadership transition and slower insurance premium growth. |
| My income-factory view | Watchlist for growth plus future yield. | Better fit for a 4%+ income screen today. |
The simple thesis
Commercial insurance is getting more complex. Businesses have to think about cyber risk, litigation, professional indemnity, climate-related exposures, business interruption and increasingly specialised policy wording. That complexity gives brokers a role that is harder to replace than a simple online comparison tool.
The attraction for income investors is that broking revenue can be fairly recurring. Clients tend to renew policies, brokers are usually paid as a percentage of premiums, and large networks can use scale to negotiate with insurers and support smaller brokerages.
That does not make these companies risk-free. They still carry meaningful debt, they rely on acquisition discipline, and the insurance pricing cycle can move against them. If premiums stop rising as quickly, organic growth can slow. AI could also reduce the value of some basic broking work over time.
AUB Group: better growth, lower starting yield
AUB has the more obvious growth story. The company has been building a broader platform across Australian broking, New Zealand, agencies, BizCover and international wholesale/specialty broking through Tysers.
In its FY26 half-year result, AUB reported higher underlying profit, lifted its interim dividend to 27 cents per share fully franked, and upgraded FY26 underlying NPAT guidance to around $220 million to $230 million. That points to a business still growing earnings, even though the share price has been under pressure over the past year.
The catch for a dividend investor is the starting yield. At around the recent share price of $26, the current cash dividend yield is roughly in the low-to-mid 3% range. That is not enough for my preferred 4% sustainable cash yield hurdle, although the fully franked grossed-up yield is more attractive.
So AUB is not a bad income stock. It is more a dividend-growth candidate that needs the right entry price. If the yield moved clearly above 4% cash while the earnings outlook remained intact, it would become more compelling.
Steadfast: the cleaner income candidate
Steadfast is the better fit if the first filter is income today. Recent data from Simply Wall Street showed SDF on a dividend yield of about 4.9%, with the dividend covered by earnings and cash flow. The latest interim dividend was 8.2 cents per share fully franked.
Steadfast’s model is also appealing from an income perspective. It operates a large broker network, provides services and systems to member brokers, and owns stakes in a number of brokerages. That gives it scale without being exactly the same type of full consolidator as AUB.
The growth outlook looks steadier rather than spectacular. The company reaffirmed FY26 guidance at the half year, and the market appears to be pricing in more caution after a weak share price period. For income investors, that share price weakness is partly why the yield now clears the 4% hurdle.
What Intelligent Investor and Simply Wall Street suggest
The external research I checked broadly supports the idea that both companies are quality businesses, but not without risks.
Intelligent Investor’s October 2025 note argued that the commercial insurance broker “middleman” has proved more resilient than expected. Broker share of commercial insurance activity has grown, not shrunk, because insurance has become more complicated. The same note also highlighted the key risks: AI, the insurance pricing cycle, higher interest costs and the danger of overpaying for acquisitions.
Simply Wall Street currently shows both companies as potentially undervalued. It also shows a clear difference in income profile: SDF has the higher current and forecast dividend yield, while AUB has the stronger forecast earnings growth.
The key risks
- Debt and acquisitions: both companies use acquisitions as part of their growth model. That can work well, but only if they buy sensibly and integrate well.
- Insurance pricing cycle: brokers benefit when premiums rise. If premium growth slows, organic revenue growth can become harder.
- AI and digital disruption: basic broking tasks may become easier to automate. Complex commercial insurance is more defensible, but not immune.
- Management execution: these are not simple passive income vehicles. The quality of capital allocation matters.
- Valuation: even good dividend compounders can disappoint if bought too expensively.
My current ranking for income investors
If I were ranking these two purely for a dividend portfolio today, I would put Steadfast first. It clears the 4% cash yield test, the dividend looks reasonably covered, and the business has defensive characteristics.
I would keep AUB on the watchlist. It may offer better long-term growth, but I would prefer either a lower entry price or clearer evidence that the higher earnings base will translate into a sustainable 4%+ cash yield.
One practical approach could be to own a small amount of both, because they share the same industry tailwinds but have different business models. However, if the mandate is specifically at least 4% sustainable income with some growth, SDF is the more natural starting point.
Verdict
SDF looks like the better income stock today. AUB looks like the better dividend-growth watchlist stock.
For my own income-factory framework, SDF is closer to a “possible portfolio candidate” now, while AUB is a “wait for the yield or valuation to improve” candidate. Both deserve monitoring because ASX insurance brokers may be one of the more overlooked ways to get exposure to recurring commercial cash flows, fully franked dividends and modest long-term growth.
Sources checked include AUB and Steadfast company announcements, MarketIndex, Simply Wall Street, Intelligent Investor and AFR reporting available as at 31 May 2026.