Horace Mann (HMN) Could Be a Great Choice

All investors love getting big returns from their portfolio, whether it's through stocks, bonds, ETFs, or other types of securities. But for income investors, generating consistent cash flow from each of your liquid investments is your primary focus.

While cash flow can come from bond interest or interest from other types of investments, income investors hone in on 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 account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.

Based in Springfield, Horace Mann (HMN) is in the Finance sector, and so far this year, shares have seen a price change of 11.19%. The provider of auto and homeowners' insurance for teachers and other educators is currently shelling out a dividend of $0.36 per share, with a dividend yield of 2.8%. This compares to the Insurance - Multi line industry's yield of 1.77% and the S&P 500's yield of 1.34%.

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.

HMN is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2026 is $4.78 per share, with earnings expected to increase 1.49% 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. 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 must be conscious 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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