An investor's goal should be to generate substantial profits from their investment portfolios, which may include stocks, bonds, exchange-traded funds (ETFs), other assets, or a mix of these. However, the main goal of income investors is to ensure that all of their liquid assets consistently provide cash flow.
While interest on bonds and other assets can provide a steady stream of cash, dividends are the main focus of income investors. Dividend yield is a statistic that investors use to evaluate dividends, which are distributions of a company's earnings to shareholders. It is expressed as a percentage of the current stock price. A considerable percentage of long-term returns, and sometimes more than a third of overall returns, are attributable to dividends, according to a number of academic studies.
Unum (UNM), a finance stock with headquarters in Chattanooga, has experienced a price change of 13.64 percent thus far this year. With an existing dividend payout of $0.37/share, the dividend yield for this firm is 2.84%. A yield of 1.56% is associated with the S&P 500, whereas 2.49% is associated with the Insurance - Accident and Health industry.
In terms of dividend growth, the current yearly dividend payment from the corporation is $1.46, an increase of 5% over the previous year. Over the last five years, Unum has raised its dividend four times, for a total of six dividend increases, or 6.22 percent per year.
Payout ratio, the percentage of a company's yearly profits per share that is distributed as a dividend, and earnings growth are the two factors that will determine the future growth of a dividend. With a payout ratio of 19% as of right now, Unum has distributed 19% of its trailing 12-month EPS to shareholders in the form of a dividend.
With this fiscal year in mind, UNM anticipates strong revenue growth. An increase of 6.79 percent from the previous year, $8.18 per share is the 2024 Zacks Consensus Estimate.
There are a lot of reasons why dividends are popular among investors. They boost returns from stock investments, lower total portfolio risk, and offer tax benefits. However, not all businesses pay their employees quarterly.
For instance, shareholders are more likely to choose larger, more established companies with more stable profitability when considering a dividend payment than they are to support high-growth corporations or digital start-ups. Income investors should be aware that high-yielding stocks often do poorly when interest rates are rising. In light of the foregoing, UNM is an alluring investment prospect, thanks to its solid Zacks Rank of #2 (Buy) and its status as an appealing dividend play.
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