Horace Mann Educators Corporation (NYSE:HMN) is about to trade ex-dividend in the next four days. You will need to purchase shares before the 15th of September to receive the dividend, which will be paid on the 30th of September.
Horace Mann Educators’s next dividend payment will be US$0.30 per share, on the back of last year when the company paid a total of US$1.20 to shareholders. Based on the last year’s worth of payments, Horace Mann Educators stock has a trailing yield of around 3.2% on the current share price of $37.34. If you buy this business for its dividend, you should have an idea of whether Horace Mann Educators’s dividend is reliable and sustainable. As a result, readers should always check whether Horace Mann Educators has been able to grow its dividends, or if the dividend might be cut.
If a company pays out more in dividends than it earned, then the dividend might become unsustainable – hardly an ideal situation. Fortunately Horace Mann Educators’s payout ratio is modest, at just 46% of profit.
Companies that pay out less in dividends than they earn in profits generally have more sustainable dividends. The lower the payout ratio, the more wiggle room the business has before it could be forced to cut the dividend.
Have Earnings And Dividends Been Growing?
Companies that aren’t growing their earnings can still be valuable, but it is even more important to assess the sustainability of the dividend if it looks like the company will struggle to grow. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. It’s not encouraging to see that Horace Mann Educators’s earnings are effectively flat over the past five years. We’d take that over an earnings decline any day, but in the long run, the best dividend stocks all grow their earnings per share.
Another key way to measure a company’s dividend prospects is by measuring its historical rate of dividend growth. Horace Mann Educators has delivered 14% dividend growth per year on average over the past 10 years.
The Bottom Line
Should investors buy Horace Mann Educators for the upcoming dividend? Horace Mann Educators has seen its earnings per share stagnate in recent years, although the company reinvests more than half of its profits in the business, which could bode well for its future prospects. Horace Mann Educators ticks a lot of boxes for us from a dividend perspective, and we think these characteristics should mark the company as deserving of further attention.
In light of that, while Horace Mann Educators has an appealing dividend, it’s worth knowing the risks involved with this stock. Every company has risks, and we’ve spotted 2 warning signs for Horace Mann Educators you should know about.
We wouldn’t recommend just buying the first dividend stock you see, though. Here’s a list of interesting dividend stocks with a greater than 2% yield and an upcoming dividend.
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This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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