Yahoo Finance Are You Looking for a High-Growth Dividend Stock?
Getting big returns from financial portfolios, whether through stocks, bonds, ETFs, other securities, or a combination of all, is an investor's dream. However, 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
Based in Chattanooga, Unum (UNM) is in the Finance sector, and so far this year, shares have seen a price change of 10.89%. The insurance company is paying out a dividend of $0.33 per share at the moment, with a dividend yield of 2.9% compared to the Insurance - Accident and Health industry's yield of 2.51% and the S&P 500's yield of 1.79%.
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 5.80%. Any future dividend growth will depend on both earnings growth and the company's payout ratio; a payout ratio is the proportion of a firm's annual earnings per share that it pays out as a dividend. Unum's current payout ratio is 20%, meaning it paid out 20% of its trailing 12-month EPS as dividend.
UNM is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2023 is $7.41 per share, with earnings expected to increase 19.32% from the year ago period.
Bottom Line
From greatly improving stock investing profits and reducing overall portfolio risk to providing tax advantages, investors like dividends for a variety of different reasons. However, not all companies offer 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. 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 #1 (Strong Buy).
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Unum Group (UNM) : Free Stock Analysis Report
