Horace Mann (HMN) is a Top Dividend Stock Right Now: Should You Buy?
Whether it's through stocks, bonds, ETFs, or other types of securities, all investors love seeing their portfolios score big returns. However, when you're an income investor, your primary focus is generating consistent cash flow from each of your liquid investments.
While cash flow can come from bond interest or interest from other types of investments, income investors hone in on dividends. A dividend is the distribution of a company's earnings paid out to shareholders; it's often viewed by its dividend yield, a metric that measures a dividend as a percent of the current stock price. Many academic studies show that dividends account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.
Horace Mann in Focus
Horace Mann (HMN) is headquartered in Springfield, and is in the Finance sector. The stock has seen a price change of 5.06% since the start of the year. The provider of auto and homeowners' insurance for teachers and other educators is paying out a dividend of $0.31 per share at the moment, with a dividend yield of 3.15% compared to the Insurance - Multi line industry's yield of 1.74% and the S&P 500's yield of 1.48%.
Looking at dividend growth, the company's current annualized dividend of $1.28 is up 3.2% from last year. Horace Mann has increased its dividend 5 times on a year-over-year basis over the last 5 years for an average annual increase of 2.84%. Any future dividend growth will depend on both earnings growth and the company's payout ratio; a payout ratio is the proportion of a firm's annual earnings per share that it pays out as a dividend. Horace Mann's current payout ratio is 35%. This means it paid out 35% of its trailing 12-month EPS as dividend.
HMN is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2022 is $3.63 per share, representing a year-over-year earnings growth rate of 1.11%.
Bottom Line
From greatly improving stock investing profits and reducing overall portfolio risk to providing tax advantages, investors like dividends for a variety of different reasons. But, not every company offers a quarterly payout.
For instance, it's a rare occurrence when a tech start-up or big growth business offers their shareholders a dividend. It's more common to see larger companies with more established profits give out dividends. During periods of rising interest rates, income investors must be mindful that high-yielding stocks tend to struggle. That said, they can take comfort from the fact that HMN is not only an attractive dividend play, but also represents a compelling investment opportunity with a Zacks Rank of #2 (Buy).
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