Horace Mann (HMN) to Reward Shareholders With 3% Dividend Hike
In an effort to enhance shareholder value, Horace Mann Educators Corporation’s HMN board of directors approved a 3.3% hike in its quarterly dividend. Following this move, the payout now stands at 31 cents per share compared with 30 cents per share paid in December 2020.
This increased dividend denotes an annualized payout of $1.24 per share. Based on the stock’s Mar 4 closing price of $41.38, the new dividend will yield nearly 3%, better than the industry average of 1.9%. With 42 million shares outstanding at 2020 end, the company looks to allocate about $13 million quarterly to pay the dividend. Shareholders of record on Mar 17 will receive the meatier dividend on Mar 31.
The latest move marks the 13th consecutive yearly hike, reflecting operational excellence and the company’s commitment to return value to its shareholders. Its dividend witnessed a 13-year CAGR of about 15%. Strategic focus on designing products to capitalize on the potential opportunity in the K-12 educator market, annuity reinsurance agreement, profitable in-force block, high quality and well-diversified investment portfolio, and cost-saving initiatives are likely to help the company continue increasing dividends. The company targets 5% dividend payout ratio.
Apart from dividend hikes, the company also engages in share buybacks. Recently, in February, the company bought backs shares worth $1.5 million. Solid operational performance and continued share repurchases should help the company achieve its core earnings guidance of $3.00 to $3.20 per share in 2021.
Solid financial foundation and operational performance will continue to generate capital, thereby aiding Horace Mann to engage in shareholder-friendly moves apart from investing in business growth at returns that meet or exceed its return on equity targets. The company estimates generating core ROE of 9-9.5% in 2021 and double-digit core ROE over the 2021-2025 period.
Shares of Horace Mann have gained 1.3% in a year compared with the industry’s rally of 22.6%. Transformational actions, profitability initiatives and niche market focus are likely to contribute to the stock rally.
Recently, three other insurers, RenaissanceRe Holdings Ltd. RNR, Cincinnati Financial Corporation CINF and The Allstate Corporation ALL have undertaken similar measures. While RenaissanceRe has approved a 2.9% hike in its quarterly dividend, Cincinnati Financial approved a 5% raise. The board of directors of Allstate approved a 50% hike in the quarterly dividend.
Horace Mann currently carries Zacks Rank #5 (Strong Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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RenaissanceRe Holdings Ltd. (RNR) : Free Stock Analysis Report
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