Horace Mann Educators' (NYSE:HMN) Dividend Will Be $0.35

The board of Horace Mann Educators Corporation (NYSE:HMN) has announced that it will pay a dividend on the 30th of June, with investors receiving $0.35 per share. The dividend yield will be 3.2% based on this payment which is still above the industry average.

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Horace Mann Educators' Payment Could Potentially Have Solid Earnings Coverage

We like to see robust dividend yields, but that doesn't matter if the payment isn't sustainable. Based on the last payment, Horace Mann Educators was quite comfortably earning enough to cover the dividend. This means that a large portion of its earnings are being retained to grow the business.

Over the next year, EPS is forecast to expand by 18.5%. If the dividend continues along recent trends, we estimate the payout ratio will be 43%, which is in the range that makes us comfortable with the sustainability of the dividend.

View our latest analysis for Horace Mann Educators

Horace Mann Educators Has A Solid Track Record

The company has an extended history of paying stable dividends. Since 2015, the annual payment back then was $0.92, compared to the most recent full-year payment of $1.40. This works out to be a compound annual growth rate (CAGR) of approximately 4.3% a year over that time. Although we can't deny that the dividend has been remarkably stable in the past, the growth has been pretty muted.

Dividend Growth May Be Hard To Come By

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. However, initial appearances might be deceiving. It's not great to see that Horace Mann Educators' earnings per share has fallen at approximately 7.2% per year over the past five years. If the company is making less over time, it naturally follows that it will also have to pay out less in dividends. Earnings are predicted to grow over the next year, but we would remain cautious until a track record of earnings growth is established.

Our Thoughts On Horace Mann Educators' Dividend

In summary, we are pleased with the dividend remaining consistent, and we think there is a good chance of this continuing in the future. The earnings coverage is acceptable for now, but with earnings on the decline we would definitely keep an eye on the payout ratio. Taking all of this into consideration, the dividend looks viable moving forward, but investors should be mindful that the company has pushed the boundaries of sustainability in the past and may do so again.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. For example, we've picked out 1 warning sign for Horace Mann Educators that investors should know about before committing capital to this stock. Is Horace Mann Educators not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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