Horace Mann (HMN) to Share More Profit, Ups Dividend by 3%
Horace Mann Educators Corporation’s HMN board of directors approved a 3.1% hike in its quarterly dividend. This insurer will now pay 34 cents per share, up from the earlier payout of 33 cents. Shareholders of record as of Mar 16, will receive the new dividend on Mar 29.
This increased dividend translates to an annualized payout of $1.36 per share. Based on the stock’s Mar 4, closing price of $35.60, the new dividend will yield nearly 3.8%, better than the industry's average of 2.5%. With 40.8 million shares outstanding at 2023-end, the company will have to dish out $13.5 million quarterly to pay the dividend.
The recent approval marks the 16th straight yearly hike, reflecting operational excellence and commitment to return value to its shareholders. Its dividend witnessed a 15-year CAGR of about 10%. The company’s strategic focus on designing products to capitalize on the potential opportunity in the K-12 educator market, annuity reinsurance agreement, strategic diversification, profitable in-force block, high quality and well-diversified investment portfolio, and cost-saving initiatives are likely to help increase dividends.
HMN targets a 50% dividend payout ratio. In fact, this currently Zacks Rank #1 (Strong Buy) insurer targets to double its earnings per share (EPS) to a range of $3.00-$3.30 in 2024, banking on these positives.
Apart from dividend hikes, the multiline financial services company focused on America’s educators also engages in share buybacks. It bought back shares worth $6.5 million in 2023 with $34.9 million remaining under authorization as of Dec 31, 2023.
A solid financial foundation and operational performance will help generate capital, thereby aiding Horace Mann to engage in shareholder-friendly moves as well as invest in business growth at returns that meet or exceed its return on equity targets. The insurer estimates generating excess capital of $50 million annually. Horace Mann estimates generating double-digit core ROE by 2025 as core EPS approaches $4.
Shares of Horace Mann have gained 8.9% year to date outperforming the industry’s increase of 2.5%. Transformational actions, profitability initiatives and niche market focus should help shares trend higher.
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Recently, Chubb Limited’s CB board of directors proposed a 5.8% hike in its dividend at the company’s annual general meeting. If approved, the insurer will now pay an annual dividend of $3.64 or 91 cents per share quarterly. The latest hike would mark the 31st straight year of dividend increase.
Chubb has maintained a strong balance sheet and financial flexibility, including consistent cash flow generation, for many years now. The insurer’s cash flow has been increasing over the years. This has paved the way for prudent capital deployment measures.
Other Stocks to Consider
Some other top-ranked stocks from the same space are Axis Capital Holdings AXS and The Progressive Corporation PGR, each sporting a Zacks Rank of 1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Axis Capital delivered a trailing four-quarter average earnings surprise of 102.57%. The stock has gained 9.6% year to date. The Zacks Consensus Estimate for AXS’ 2024 and 2025 earnings indicates an increase of 3.1% and 10.1%, respectively.
Progressive delivered an earnings surprise in two of the last four quarters while missing the estimates on the other two occasions. The stock has gained 19.3% year to date. The Zacks Consensus Estimate for PGR’s 2024 and 2025 earnings indicates an increase of 49.4% and 14.8%, respectively.
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