Yahoo Finance Why Unum (UNM) is a Great Dividend Stock Right Now
All investors love getting big returns from their portfolio, whether it's through stocks, bonds, ETFs, or other types of securities. 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 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 make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.
Unum in Focus
Headquartered in Chattanooga, Unum (UNM) is a Finance stock that has seen a price change of -7.36% so far this year. Currently paying a dividend of $0.33 per share, the company has a dividend yield of 3.47%. In comparison, the Insurance - Accident and Health industry's yield is 2.54%, while the S&P 500's yield is 1.8%.
Taking a look at the company's dividend growth, its current annualized dividend of $1.32 is up 4.8% 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 6.16%. Future dividend growth will depend on earnings growth as well as 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 21%, which means it paid out 21% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for UNM for this fiscal year. The Zacks Consensus Estimate for 2023 is $6.66 per share, which represents a year-over-year growth rate of 7.25%.
Bottom Line
Investors like dividends for a variety of different reasons, from tax advantages and decreasing overall portfolio risk to considerably improving stock investing profits. 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 have to be mindful 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 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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Unum Group (UNM) : Free Stock Analysis Report
