Horace Mann Educators (NYSE:HMN) Will Pay A Larger Dividend Than Last Year At $0.34
Horace Mann Educators Corporation (NYSE:HMN) has announced that it will be increasing its periodic dividend on the 29th of March to $0.34, which will be 3.0% higher than last year's comparable payment amount of $0.33. This will take the dividend yield to an attractive 3.7%, providing a nice boost to shareholder returns.
Check out our latest analysis for Horace Mann Educators
Horace Mann Educators' Earnings Easily Cover The Distributions
Impressive dividend yields are good, but this doesn't matter much if the payments can't be sustained. Before making this announcement, Horace Mann Educators' dividend was higher than its profits, but the free cash flows quite comfortably covered it. Healthy cash flows are always a positive sign, especially when they quite easily cover the dividend.
According to analysts, EPS should be several times higher next year. If recent patterns in the dividend continue, we could see the payout ratio reaching 37% which is fairly sustainable.
Horace Mann Educators Has A Solid Track Record
The company has been paying a dividend for a long time, and it has been quite stable which gives us confidence in the future dividend potential. Since 2014, the annual payment back then was $0.78, compared to the most recent full-year payment of $1.32. This implies that the company grew its distributions at a yearly rate of about 5.4% over that duration. The growth of the dividend has been pretty reliable, so we think this can offer investors some nice additional income in their portfolio.
Horace Mann Educators Might Find It Hard To Grow Its Dividend
Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. We are encouraged to see that Horace Mann Educators has grown earnings per share at 20% per year over the past five years. While EPS is growing rapidly, Horace Mann Educators paid out a very high 121% of its income as dividends. If earnings continue to grow, this dividend may be sustainable, but we think a payout this high definitely bears watching.
In Summary
Overall, we always like to see the dividend being raised, but we don't think Horace Mann Educators will make a great income stock. The company is generating plenty of cash, but we still think the dividend is a bit high for comfort. This company is not in the top tier of income providing stocks.
It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. Case in point: We've spotted 3 warning signs for Horace Mann Educators (of which 1 makes us a bit uncomfortable!) you should know about. Is Horace Mann Educators not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
