Top Dividend Stocks – CNO Financial Group’s (NYSE:CNO) Shareholders Will Receive A Bigger Dividend Than Last Year
The board of CNO Financial Group, Inc. (NYSE:CNO) has announced that it will be increasing its dividend on the 24th of June to US$0.13. This takes the annual payment to 1.9% of the current stock price, which is about average for the industry.
CNO Financial Group’s Payment Has Solid Earnings Coverage
Solid dividend yields are great, but they only really help us if the payment is sustainable. However, prior to this announcement, CNO Financial Group’s dividend was comfortably covered by both cash flow and earnings. This means that most of its earnings are being retained to grow the business.
Over the next year, EPS is forecast to fall by 27.4%. If the dividend continues along recent trends, we estimate the payout ratio could be 22%, which we consider to be quite comfortable, with most of the company’s earnings left over to grow the business in the future.
NYSE:CNO Historic Dividend June 4th 2021
CNO Financial Group Is Still Building Its Track Record
The dividend’s track record has been pretty solid, but with only 9 years of history we want to see a few more years of history before making any solid conclusions. Since 2012, the dividend has gone from US$0.08 to US$0.52. This means that it has been growing its distributions at 23% per annum over that time. We’re not overly excited about the relatively short history of dividend payments, however the dividend is growing at a nice rate and we might take a closer look.
The Dividend Looks Likely To Grow
Investors could be attracted to the stock based on the quality of its payment history. CNO Financial Group has impressed us by growing EPS at 19% per year over the past five years. A low payout ratio and decent growth suggests that the company is reinvesting well, and it also has plenty of room to increase the dividend over time.
CNO Financial Group Looks Like A Great Dividend Stock
Overall, we think this could be an attractive income stock, and it is only getting better by paying a higher dividend this year. The earnings easily cover the company’s distributions, and the company is generating plenty of cash. We should point out that the earnings are expected to fall over the next 12 months, which won’t be a problem if this doesn’t become a trend, but could cause some turbulence in the next year. Taking this all into consideration, this looks like it could be a good dividend opportunity.
It’s important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. For example, we’ve identified 4 warning signs for CNO Financial Group (2 make us uncomfortable!) that you should be aware of before investing. If you are a dividend investor, you might also want to look at our curated list of high performing dividend stock.
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