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.
Horace Mann in Focus
Headquartered in Springfield, Horace Mann (HMN) is a Finance stock that has seen a price change of 9.25% so far this year. Currently paying a dividend of $0.35 per share, the company has a dividend yield of 3.27%. In comparison, the Insurance - Multi line industry's yield is 1.81%, while the S&P 500's yield is 1.6%.
Taking a look at the company's dividend growth, its current annualized dividend of $1.40 is up 2.9% 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 3.18%. 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. Right now, Horace Mann's payout ratio is 38%, which means it paid out 38% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for HMN for this fiscal year. The Zacks Consensus Estimate for 2025 is $4.01 per share, representing a year-over-year earnings growth rate of 26.10%.
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. But, not every company offers 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 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 HMN is not only an attractive dividend play, but is also a compelling investment opportunity with a Zacks Rank of #1 (Strong Buy).
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Horace Mann Educators Corporation (HMN): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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