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Are You Looking for a High-Growth Dividend Stock? Horace Mann (HMN) Could Be a Great Choice

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Getting big returns from financial portfolios, whether through stocks, bonds, ETFs, other securities, or a combination of all, is an investor's dream. 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 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.

Horace Mann in Focus

Based in Springfield, Horace Mann (HMN - Free Report) is in the Finance sector, and so far this year, shares have seen a price change of 5.37%. The provider of auto and homeowners' insurance for teachers and other educators is paying out a dividend of $0.32 per share at the moment, with a dividend yield of 3.14% compared to the Insurance - Multi line industry's yield of 1.69% and the S&P 500's yield of 1.45%.

Taking a look at the company's dividend growth, its current annualized dividend of $1.28 is up 3.2% from last year. Over the last 5 years, Horace Mann has increased its dividend 5 times on a year-over-year basis for an average annual increase of 3.02%. Any future dividend growth will depend on both earnings growth and the company's payout ratio; a payout ratio is the proportion of a firm's annual earnings per share that it pays out as a dividend. Horace Mann's current payout ratio is 35%. This means it paid out 35% of its trailing 12-month EPS as dividend.

Earnings growth looks solid for HMN for this fiscal year. The Zacks Consensus Estimate for 2022 is $3.60 per share, with earnings expected to increase 0.28% from the year ago period.

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. However, not all companies offer a quarterly payout.

For instance, it's a rare occurrence when a tech start-up or big growth business offers their shareholders a dividend. It's more common to see larger companies with more established profits give out dividends. 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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