On Apr 8, shares of Horace Mann Educators Corp. HMN scaled a new 52-week high of $35.79 on its latest dividend hike and mixed fourth-quarter 2014 results. This paves the way for an improved performance in 2015.
Horace Mann’s one-year return of 24.9% was higher than the S&P 500’s return of 12.0%. The return was also much above the other industry players like Progressive Corp. PGR, Berkshire Hathaway Inc. BRK.A and MetLife, Inc. MET, which returned 9.5%, 23.7% and 0.9%, respectively.
Horace Mann’s board of directors hiked its quarterly cash dividend by 9%. The dividend hike translates into a quarterly cash dividend of 25 cents per share, up from 23 cents paid on Dec 31, 2014. The raised dividend was paid on Mar 31 to shareholders on record as of Mar 16. Horace Mann has an impressive track of raising dividends. The company has been increasing its quarterly dividends consistently over the last seven years. In Mar 2014, the company had hiked its dividend by 18%.
The dividend hike reflects both the financial strength and strong operating results of the company in 2014. Based on the outstanding share count of 42.2 million as of Dec 31, 2014, Horace Mann should require $10.6 million every quarter for the dividend payment. The company has ample liquidity for the payment. We believe that the dividend hike should boost investor confidence and thus help in stock price appreciation going forward.
Horace Mann reported mixed fourth-quarter results in the second week of Feb 2015. The company’s sales were strong, with double-digit growth across all segments. Additionally, combined ratio showed an improvement in 2014, driven by the decreased level of catastrophe losses and constant improvement in auto underlying results.
Moreover, management is optimistic about the company’s performance in 2015. The company expects to engage in strategic initiatives and witness an improvement in the underlying property and casualty combined ratio in 2015 that should drive earnings.
Horace Mann currently carries a Zacks Rank #4 (Sell).
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