Unum (UNM) Could Be a Great Choice
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 that coveted distribution of a company's earnings paid out to shareholders, and investors often view it by its dividend yield, a metric that measures the dividend as a percent of the current stock price. Many academic studies show that dividends make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.
Unum in Focus
Headquartered in Chattanooga, Unum (UNM) is a Finance stock that has seen a price change of 8.87% so far this year. The insurance company is currently shelling out a dividend of $0.37 per share, with a dividend yield of 2.97%. This compares to the Insurance - Accident and Health industry's yield of 2.49% and the S&P 500's yield of 1.64%.
Taking a look at the company's dividend growth, its current annualized dividend of $1.46 is up 5% from last year. Unum has increased its dividend 4 times on a year-over-year basis over the last 5 years for an average annual increase of 6.22%. Future dividend growth will depend on earnings growth as well as payout ratio, which is the proportion of a company's annual earnings per share that it pays out as a dividend. Right now, Unum's payout ratio is 19%, which means it paid out 19% of its trailing 12-month EPS as dividend.
UNM is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2024 is $8.16 per share, representing a year-over-year earnings growth rate of 6.53%.
Bottom Line
Investors like dividends for a variety of different reasons, from tax advantages and decreasing overall portfolio risk to considerably improving stock investing profits. It's important to keep in mind that not all companies provide a quarterly payout.
Big, established firms that have more secure profits are often seen as the best dividend options, but it's fairly uncommon to see high-growth businesses or tech start-ups offer their stockholders a dividend. Income investors must be conscious of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. That said, they can take comfort from the fact that UNM is not only an attractive dividend play, but is also a compelling investment opportunity with a Zacks Rank of #2 (Buy).
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Unum Group (UNM) : Free Stock Analysis Report
