Unlocking Potential: Why Unum (NYSE: UNM) is a Smart Choice

Author: Ryan Hughes Updated: 09-10-2024 04:27 PM

Understanding Income Investing

Every investor dreams of achieving remarkable returns from their assets, whether through stocks, bonds, or other security types. For income investors, however, the primary objective shifts towards generating steady cash flow from their investments. This focus on cash flow often translates to an emphasis on dividend-paying stocks. A dividend represents a portion of a company's profits that is distributed to its shareholders, and it's typically gauged through the dividend yield, which expresses dividends as a percentage of the stock's current price. Academic research reveals that dividends make a substantial contribution to long-term investment returns, often accounting for over one-third of total profitability.

Spotlight on Unum

Unum (NYSE: UNM) operates in the Finance sector and has shown an impressive price increase of 20.21% this year. The company currently offers a dividend of $0.42 per share, equating to a dividend yield of 3.09%. This yield significantly surpasses the industry average of 1.84% for Insurance - Accident and Health, as well as the broader S&P 500's average yield of 1.58%.

Growth of Dividends

The company's commitment to returning value to shareholders is evident in its dividend growth. Unum's annualized dividend of $1.68 reflects a notable increase of 20.9% from the previous year. Over the past five years, Unum has raised its dividend four times, reflecting an average annual growth rate of 6.37%. Future dividend increments will hinge on the growth of earnings as well as the company's payout ratio. As it stands, Unum maintains a payout ratio of 18%, indicating that it returns 18% of its trailing twelve-month earnings per share as dividends.

Future Earnings Growth

Expectations for Unum's earnings are optimistic as well. The Consensus Estimate for 2024 suggests earnings of $8.46 per share, corresponding to a year-over-year growth rate of 10.44%. This positive forecast emphasizes the company's potential for rewarding investors.

Weighing the Investment

Dividends hold a crucial spot in the realm of investment for various compelling reasons. They can elevate stock investing profits, mitigate overall portfolio risk, and offer favorable tax implications among other benefits. However, not every company is positioned to provide regular dividend payouts.

Established companies, particularly those with stable earnings, are commonly viewed as prime candidates for dividend investments. High-growth companies or tech startups, on the other hand, rarely offer dividends. Additionally, income investors should remain vigilant to the challenges posed by high-yield stocks during periods of interest rate hikes. Against this backdrop, Unum represents an alluring investment prospect, offering not only a robust dividend opportunity but also earning a strong Buy rating in market assessments.

Frequently Asked Questions

What makes Unum (NYSE: UNM) a good investment choice?

Unum offers a strong dividend yield of 3.09% and has shown consistent dividend growth, making it attractive to income investors.

How has Unum performed this year?

Unum has experienced a price increase of 20.21%, reflecting robust performance in the finance sector.

What is Unum’s current dividend payout?

The current dividend payout by Unum is $0.42 per share, with an annualized dividend of $1.68.

What is Unum’s payout ratio?

Unum currently maintains a payout ratio of 18%, indicating a strong commitment to returning capital to shareholders.

What are the future earnings expectations for Unum?

The earnings consensus for Unum in 2024 anticipates a growth rate of 10.44%, indicating positive outlook for the company.

About Investors Hangout

Investors Hangout is a leading online stock forum for financial discussion and learning, offering a wide range of free tools and resources. It draws in traders of all levels, who exchange market knowledge, investigate trading tactics, and keep an eye on industry developments in real time. Featuring financial articles, stock message boards, quotes, charts, company profiles, and live news updates. Through cooperative learning and a wealth of informational resources, it helps users from novices creating their first portfolios to experts honing their techniques. Join Investors Hangout today: https://investorshangout.com/

Disclaimer: The content of this article is solely for general informational purposes only; it does not represent legal, financial, or investment advice. Investors Hangout does not offer financial advice; the author is not a licensed financial advisor. Consult a qualified advisor before making any financial or investment decisions based on this article. The author's interpretation of publicly available data shapes the opinions presented here; as a result, they should not be taken as advice to purchase, sell, or hold any securities mentioned or any other investments. The author does not guarantee the accuracy, completeness, or timeliness of any material, providing it "as is." Information and market conditions may change; past performance is not indicative of future outcomes. If any of the material offered here is inaccurate, please contact us for corrections.