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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. But 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 account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.
Unum in Focus
Unum (UNM - Free Report) is headquartered in Chattanooga, and is in the Finance sector. The stock has seen a price change of 25.08% since the start of the year. The insurance company is currently shelling out a dividend of $0.42 per share, with a dividend yield of 2.97%. This compares to the Insurance - Accident and Health industry's yield of 2.11% and the S&P 500's yield of 1.61%.
In terms of dividend growth, the company's current annualized dividend of $1.68 is up 20.9% from last year. Unum has increased its dividend 4 times on a year-over-year basis over the last 5 years for an average annual increase of 6.37%. 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, Unum's payout ratio is 18%, which means it paid out 18% of its trailing 12-month EPS as dividend.
UNM is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2024 is $8.33 per share, with earnings expected to increase 8.75% from the year ago period.
Bottom Line
Investors like dividends for many reasons; they greatly improve stock investing profits, decrease overall portfolio risk, and carry tax advantages, among others. 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. That said, they can take comfort from the fact that UNM 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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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.
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 account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.
Unum in Focus
Unum (UNM - Free Report) is headquartered in Chattanooga, and is in the Finance sector. The stock has seen a price change of 25.08% since the start of the year. The insurance company is currently shelling out a dividend of $0.42 per share, with a dividend yield of 2.97%. This compares to the Insurance - Accident and Health industry's yield of 2.11% and the S&P 500's yield of 1.61%.
In terms of dividend growth, the company's current annualized dividend of $1.68 is up 20.9% from last year. Unum has increased its dividend 4 times on a year-over-year basis over the last 5 years for an average annual increase of 6.37%. 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, Unum's payout ratio is 18%, which means it paid out 18% of its trailing 12-month EPS as dividend.
UNM is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2024 is $8.33 per share, with earnings expected to increase 8.75% from the year ago period.
Bottom Line
Investors like dividends for many reasons; they greatly improve stock investing profits, decrease overall portfolio risk, and carry tax advantages, among others. 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. That said, they can take comfort from the fact that UNM is not only an attractive dividend play, but also represents a compelling investment opportunity with a Zacks Rank of #2 (Buy).