CNO Financial (CNO) is a Top Dividend Stock Right Now: Should You Buy?
All investors love getting big returns from their portfolio, whether it's through stocks, bonds, ETFs, or other types of securities. However, when you're an income investor, your primary focus is generating consistent cash flow from each of your liquid investments.
Cash flow can come from bond interest, interest from other types of investments, and of course, 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 make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.
CNO Financial in Focus
Headquartered in Carmel, CNO Financial (CNO) is a Finance stock that has seen a price change of -10.53% so far this year. The insurance holding company is currently shelling out a dividend of $0.12 per share, with a dividend yield of 2.96%. This compares to the Insurance - Multi line industry's yield of 2.59% and the S&P 500's yield of 1.76%.
Taking a look at the company's dividend growth, its current annualized dividend of $0.48 is up 11.6% from last year. In the past five-year period, CNO Financial has increased its dividend 5 times on a year-over-year basis for an average annual increase of 11.69%. Looking ahead, future dividend growth will be dependent on earnings growth and payout ratio, which is the proportion of a company's annual earnings per share that it pays out as a dividend. CNO's current payout ratio is 22%, meaning it paid out 22% of its trailing 12-month EPS as dividend.
CNO is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2020 is $1.85 per share, representing a year-over-year earnings growth rate of 2.78%.
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. However, not all companies offer a quarterly payout.
Big, established firms that have more secure profits are often seen as the best dividend options, but it's fairly uncommon to see high-growth businesses or tech start-ups offer their stockholders a dividend. During periods of rising interest rates, income investors must be mindful that high-yielding stocks tend to struggle. With that in mind, CNO is a compelling investment opportunity. Not only is it a strong dividend play, but the stock currently sits at a Zacks Rank of 3 (Hold).
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CNO Financial Group, Inc. (CNO) : Free Stock Analysis Report
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