Horace Mann (HMN) Ups Dividend to Boost Shareholders' Worth
Horace Mann Educators Corporation’s HMN board of directors approved a 3.1% hike in its quarterly dividend. This insurer will now pay 33 cents per share to shareholders of record on Mar 16. The dividend will be paid out on Mar 31.
This increased dividend translates to an annualized payout of $1.32 per share. Based on the stock’s Mar 7 closing price of $36.55, the new dividend will yield nearly 3.6%, better than the industry average of 2.2%. With 41.8 million shares outstanding at 2022 end, the company will have to dish out $13.8 million quarterly to pay the dividend.
The recent approval marks the 15th consecutive 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, profitable in-force block, high quality and well-diversified investment portfolio, and cost-saving initiatives are likely to help Horace Mann increase dividends. HMN targets a 50% dividend payout ratio.
Apart from dividend hikes, HMN also engages in share buybacks. It bought back shares worth $24 million in 2022 with $41.3 million remaining under authorization as of Dec 31, 2022. Solid operational performance driven by growth across all segments and continued share repurchases should help the insurer achieve its core earnings guidance of $2.00 to $2.30 per share in 2023.
Its 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 insurer estimates generating excess capital of $50 million annually. Horace Mann estimates generating double-digit core ROE by 2024 as core EPS approaches $4.
Shares of Horace Mann have lost 11.7% in a year versus the industry’s decrease of 2%. Transformational actions, profitability initiatives and niche market focus are likely to help shares bounce back.
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HMN currently carries Zacks Rank #5 (Strong Sell).
Given the solid capital level of the insurance industry and improving operating backdrop favoring strong operational performance, insurers like Chubb Limited CB, Cincinnati Financial Corporation CINF and Radian Group RDN have resorted to effective capital deployment.
Chubb’s board looks to increase its annual dividend by 3.6%. Historically, Chubb’s dividends have witnessed an eight-year CAGR (2022-2023) of 2.4%. Its dividend yield of 1.6% betters the industry average of 0.3%. Chubb has maintained a strong balance sheet and financial flexibility, including consistent cash flow generation, for the past many years. The insurer’s cash flow has been increasing over the years. This has paved the way for prudent capital deployment measures.
Cincinnati Financial’s board of directors approved a dividend of 75 cents per share for the first quarter of 2023, reflecting a 9% increase. This action sets the stage for the 63rd consecutive year of dividend hike. This reflects Cincinnati Financial’s strong operating performance, the board's positive outlook and confidence in outstanding capital, liquidity and financial flexibility.
The board of directors of Radian Group approved a 12.5% hike in its annual dividend. With this, the payout now stands at 22.5 cents per share. This is the fourth consecutive year where RDN has increased the quarterly dividend with a total increase of 80% over the past three years. The multi-line insurer maintains a solid balance sheet with sufficient liquidity and strong cash flows. A strong capital position helps Radian Group deploy capital via share repurchases and dividend hikes that enhance shareholders’ value. Radian’s solid cash flow also looks impressive.
Shares of CB have gained 1.4% in a year while that of CINF and RDN lost 2.9% and 2.7%, respectively in the same time frame.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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Chubb Limited (CB) : Free Stock Analysis Report
Cincinnati Financial Corporation (CINF) : Free Stock Analysis Report
Radian Group Inc. (RDN) : Free Stock Analysis Report
Horace Mann Educators Corporation (HMN) : Free Stock Analysis Report
