Horace Mann Educators (NYSE:HMN) Is Paying Out A Larger Dividend Than Last Year

Horace Mann Educators Corporation (NYSE:HMN) will increase its dividend on the 31st of March to US$0.32, which is 3.2% higher than last year. This will take the annual payment from 3.0% to 3.0% of the stock price, which is above what most companies in the industry pay.

View our latest analysis for Horace Mann Educators

Horace Mann Educators' Payment Has Solid Earnings Coverage

Impressive dividend yields are good, but this doesn't matter much if the payments can't be sustained. However, prior to this announcement, Horace Mann Educators' dividend was comfortably covered by both cash flow and earnings. This means that most of what the business earns is being used to help it grow.

Over the next year, EPS is forecast to expand by 6.4%. Assuming the dividend continues along recent trends, we think the payout ratio could be 35% by next year, which is in a pretty sustainable range.

Horace Mann Educators Has A Solid Track Record

The company has a sustained record of paying dividends with very little fluctuation. Since 2012, the first annual payment was US$0.44, compared to the most recent full-year payment of US$1.24. This implies that the company grew its distributions at a yearly rate of about 11% over that duration. Rapidly growing dividends for a long time is a very valuable feature for an income stock.

The Dividend Looks Likely To Grow

The company's investors will be pleased to have been receiving dividend income for some time. It's encouraging to see Horace Mann Educators has been growing its earnings per share at 11% a year over the past five years. Horace Mann Educators definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

We Really Like Horace Mann Educators' Dividend

Overall, we think this could be an attractive income stock, and it is only getting better by paying a higher dividend this year. Distributions are quite easily covered by earnings, which are also being converted to cash flows. Taking this all into consideration, this looks like it could be a good dividend opportunity.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. However, there are other things to consider for investors when analysing stock performance. To that end, Horace Mann Educators has 3 warning signs (and 1 which shouldn't be ignored) we think you should know about. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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