All investors love getting big returns from their portfolio, whether it's through stocks, bonds, ETFs, or other types of securities. However, when you're an income investor, your primary focus is generating consistent cash flow from each of your liquid investments.
Cash flow can come from bond interest, interest from other types of investments, and of course, 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 make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.
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 -17% since the start of the year. The provider of auto and homeowners' insurance for teachers and other educators is currently shelling out a dividend of $0.3 per share, with a dividend yield of 3.31%. This compares to the Insurance - Multi line industry's yield of 3.42% and the S&P 500's yield of 2.03%.
Taking a look at the company's dividend growth, its current annualized dividend of $1.20 is up 4.3% 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 3.47%. Looking ahead, future dividend growth will be dependent on earnings growth and payout ratio, which is the proportion of a company's annual earnings per share that it pays out as a dividend. Horace Mann's current payout ratio is 51%. This means it paid out 51% of its trailing 12-month EPS as dividend.
HMN is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2020 is $2.75 per share, with earnings expected to increase 25% from the year ago period.
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.
High-growth firms or tech start-ups, for example, rarely provide their shareholders a dividend, while larger, more established companies that have more secure profits are often seen as the best dividend options. During periods of rising interest rates, income investors must be mindful that high-yielding stocks tend to struggle. With that in mind, HMN is a compelling investment opportunity. Not only is it a strong dividend play, but the stock currently sits at a Zacks Rank of 3 (Hold).
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Horace Mann Educators Corporation (HMN) : Free Stock Analysis Report
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