Getting big returns from financial portfolios, whether through stocks, bonds, ETFs, other securities, or a combination of all, is an investor's dream. But 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 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 account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.
Kemper in Focus
Kemper (KMPR) is headquartered in Chicago, and is in the Finance sector. The stock has seen a price change of -5.96% since the start of the year. The insurance holding company is paying out a dividend of $0.32 per share at the moment, with a dividend yield of 2.05% compared to the Insurance - Multi line industry's yield of 1.68% and the S&P 500's yield of 1.59%.
In terms of dividend growth, the company's current annualized dividend of $1.28 is up 3.2% from last year. Over the last 5 years, Kemper has increased its dividend 2 times on a year-over-year basis for an average annual increase of 0.69%. 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. Kemper's current payout ratio is 21%. This means it paid out 21% of its trailing 12-month EPS as dividend.
KMPR is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2025 is $6.03 per share, with earnings expected to increase 2.38% from the year ago period.
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. It's important to keep in mind that not all companies provide 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. Income investors have to be mindful 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 KMPR 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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Kemper Corporation (KMPR): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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