Are You Looking for a High-Growth Dividend Stock?

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.

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.

Headquartered in Springfield, Horace Mann (HMN) is a Finance stock that has seen a price change of 12.34% so far this year. The provider of auto and homeowners' insurance for teachers and other educators is paying out a dividend of $0.36 per share at the moment, with a dividend yield of 2.78% compared to the Insurance - Multi line industry's yield of 1.96% and the S&P 500's yield of 1.32%.

Looking at dividend growth, the company's current annualized dividend of $1.44 is up 2.9% 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 3.20%. 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 29%, meaning it paid out 29% of its trailing 12-month EPS as dividend.

Earnings growth looks solid for HMN for this fiscal year. The Zacks Consensus Estimate for 2026 is $4.78 per share, representing a year-over-year earnings growth rate of 1.49%.

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.

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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This article originally published on Zacks Investment Research (zacks.com).

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