Why Unum is a Great Dividend Stock Right Now
Whether it’s through stocks, bonds, ETFs, or other types of securities, all investors love seeing their portfolios score big returns. But when you’re an income investor, your primary focus is generating consistent cash flow from each of your liquid investments.
While cash flow can come from bond interest or interest from other types of investments, income investors hone in on 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 account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.
Unum in Focus
Unum UNM is headquartered in Chattanooga, and is in the Finance sector. The stock has seen a price change of 38.72% since the start of the year. The insurance company is currently shelling out a dividend of $0.42 per share, with a dividend yield of 2.68%. This compares to the Insurance – Accident and Health industry’s yield of 1.74% and the S&P 500’s yield of 1.5%.
Taking a look at the company’s dividend growth, its current annualized dividend of $1.68 is up 20.9% from last year. Over the last 5 years, Unum has increased its dividend 4 times on a year-over-year basis for an average annual increase of 7.59%. Future dividend growth will depend on earnings growth as well as payout ratio, which is the proportion of a company’s annual earnings per share that it pays out as a dividend. Right now, Unum’s payout ratio is 18%, which means it paid out 18% of its trailing 12-month EPS as dividend.
UNM is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2024 is $8.49 per share, with earnings expected to increase 10.84% from the year ago period.
Bottom Line
Investors like dividends for many reasons; they greatly improve stock investing profits, decrease overall portfolio risk, and carry tax advantages, among others. 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. Income investors have to be mindful of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. With that in mind, UNM 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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Bullish Monday For Marijuana Stocks – Body and Mind, Global Compliance Among Top Gainers
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'With All Due Respect, This Makes No Sense' – Suze Orman Explains Why This $1.6 Million 401(k) Rollover Plan Could Backfire
In a recent episode of her Women & Money podcast, Suze Orman took a firm stance on a complicated retirement strategy proposed by a listener.
A 56-year-old retiree, Gina, sought Orman’s advice on rolling over $1.6 million from her pretax 401(k) into a Roth IRA over ten years without tapping into her liquid savings to cover taxes. Her company’s benefits advisor had recommended a series of steps that seemed, on the surface, like a viable plan to avoid an immediate tax hit. Orman, however, didn’t mince words in her response: “That’s absolutely crazy.”
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Gina’s approach, as advised by her company, involved rolling over $100,000 from her pretax 401(k) to a Roth 401(k) and then from her Roth 401(k) to a Roth IRA. To cover the taxes owed on the conversion, she planned to withdraw $40,000 from her 401(k) and have her company withhold 100% of that amount for taxes. If too much was withheld, she anticipated receiving a refund; if too little, she expected to owe a manageable amount.
See Also: I’m 62 Years Old And Have $1.2 Million Saved. Is This Enough to Retire Stress-Free?
The rationale behind this strategy may have been to minimize the upfront tax burden, but Orman quickly pointed out its fatal flaw: taxes. When converting funds from a pretax 401(k) to a Roth account, you move money from a tax-deferred status to one where taxes must be paid upfront. “That’s not a rollover,” Orman emphasized, “that’s a conversion … so guess what? My dear Gina, you owe taxes from that point in time.”
One key misconception in Gina’s plan is the belief that she could somehow lessen the tax impact by moving funds between different retirement accounts. Orman clarified that this isn’t possible: “Like, what have you avoided there?” Any conversion from a pretax 401(k) to a Roth IRA triggers a taxable event in the year the conversion takes place and no amount of shuffling between accounts can bypass that reality.
See Also: How do billionaires pay less in income tax than you? Tax deferring is their number one strategy.
Moreover, Orman warned that if Gina’s Roth IRA hadn’t been open for at least five years, even funds from a Roth 401(k) could face taxes on earnings when withdrawn. This added complication makes Gina’s plan unnecessary and potentially harmful regarding unexpected taxes.
So, what should Gina do instead?
According to Orman, Gina should start converting portions of the 401(k) directly into the Roth IRA and paying the taxes from savings. Orman advised converting smaller amounts each year – like the $100,000 Gina originally suggested – but stressed the importance of covering the tax liability using funds outside of the 401(k).
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“If you don’t want to use your liquid savings to pay taxes, don’t do it at all,” Orman stated bluntly. There’s no way around the tax hit when converting from a pretax account to a Roth. The only variable is how you choose to handle the payment.
Investopedia also recommends that when moving funds from a pretax account to a Roth account to pay the funds with savings rather than from their 401(k). If you don’t, you could miss out on years of compounding and have to pay more than the original tax amount from the conversion.
Gina’s situation serves as a reminder that even well-intentioned strategies can backfire when you don’t understand tax laws. For retirees with large pretax retirement accounts, the appeal of Roth conversions is undeniable: tax-free growth and withdrawals in retirement. However, trying to outsmart the tax system can lead to costly mistakes.
Understanding the basics of how retirement accounts are taxed is an important step before making any major moves. Consider speaking with a financial advisor you trust and who can explain the pros and cons of moving funds between accounts.
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This article ‘With All Due Respect, This Makes No Sense’ – Suze Orman Explains Why This $1.6 Million 401(k) Rollover Plan Could Backfire originally appeared on Benzinga.com
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Is Colorado's Cannabis Market Back On Track? A 5% Sales Boost Says Yes
According to a recent report from Beacon Securities, cannabis sales in Colorado and Connecticut are showing mixed results, reflecting both growth and challenges in the legal cannabis market.
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Colorado Sales Up 5% Quarter-To-Date
In Colorado, legal cannabis sales totaled $122 million in August, holding steady month-over-month but down 8% compared to $132 million in August 2023. However, on a quarter-to-date (QTD) basis, sales reached $245 million for July and August, up 5% from the $233 million recorded in April and May.
The Colorado Department of Revenue (CDOR) reported 673 adult-use dispensaries by the end of August, with an average revenue of $162,000 per dispensary, or approximately $1.9 million annually. This is a slight decline from $172,000 per dispensary in August 2023, but the year-over-year declines in revenue per dispensary have slowed, partially due to a 2% reduction in store count since January.
Notable companies with operations in Colorado include Schwazze SHWZ and The Cannabist Company CBSTF.
Connecticut Sales Flat Year-Over-Year
In Connecticut, legal cannabis sales reached $23.4 million in September, down 9% month-over-month but 7% lower than September 2023. Despite the monthly dip, quarterly sales totaled $74 million in Q3 2024, up 2% from Q2 2024.
With 51 dispensaries operating by the end of September, the average revenue per dispensary was $460,000 per month, down 14% from $535,000 in August. Companies with notable operations in Connecticut include Curaleaf CURLF, Green Thumb Industries GTBIF, Trulieve Cannabis TCNNF, and Verano Holdings VRNOF.
Read Also: Grown Rogue Secures $800K, Vireo Forfeits 4.5M Warrants In Cannabis Shakeup—What’s Next For Both?
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Dividend Investor Who 'Doubled' His Passive Income to $1,000 a Month in Six Months Reveals Portfolio: Top 8 High-Yield Stocks
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As enthusiasm for top AI stocks begins to slow amid valuation concerns, investors are looking beyond just a handful of tech stocks to boost their income streams. Dividend stocks are back on the radar of long-term investors in this context. In an August report, S&P Global estimated that aggregate global dividend payments will reach $2.3 trillion in 2024, up 6.7% from last year, with North America leading in dividend growth.
But which safe and reliable dividend stocks should you invest in to increase your passive income or reach financial freedom? To find inspiration and ideas, let’s turn to a success story.
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About nine months ago, an investor shared his detailed dividend income report on /Dividends (a community of about 580,000 income investors on Reddit), saying that he reached a $1,000 monthly income milestone after seven years of investing. He said he could “double” his passive income in just six months by adding to his positions in a few stocks (mentioned later in the article) and was eyeing $50,000 in annual dividend income.
According to the portfolio screenshots he shared on Reddit, he invested about $200,000. This initial investment rose to $281,540 in seven years. Since the investor said he was earning $12,000 annually and $1,000 monthly, his portfolio’s yield is about 4.2%.
The investor was asked about his stock-picking strategy. He said:
“I selected stocks based on profitability, their industry and their growth. I have been investing for seven years.”
Responding to another comment, the Redditor said he focuses on high-yield stocks, their industry and growth.
Based on the portfolio details he shared with fellow investors on Reddit, let’s dig deeper into his portfolio details and see some of the top high-yield dividend stocks he was holding.
Altria
Tobacco products company Altria Group Inc (NYSE:MO) was among the top high-yield dividend stocks in the portfolio of the Redditor making $1,000 per month in dividends. His portfolio screenshots showed he owned about 300 shares of the company. Over the past year, Altria Group Inc (NYSE:MO) has gained about 16%. The company has raised its dividends for about 55 years in a row. MO yields over 8%.
Arbor Realty Trust
Arbor Realty Trust Inc. (NYSE:ABR) is a mortgage REIT with a dividend yield of over 11%. According to the portfolio details he shared publicly, the Redditor owned about 930 shares of the company.
Someone in the comments asked the investor why he owned so many ABR shares. Here was his response (reminder, it was nine months back):
“Because it’s $14 a share and has a good yield. Plus, the market is starting to rebound back pretty well.”
Realty Income
With a dividend yield of over 5% and consistent monthly dividends, Realty Income Corp (NYSE:O) is one of the top dividend stocks for any portfolio. Over the past year, the stock has gained about 21%. The company has increased its dividends every year for the past 30 years. The Redditor had about 519 shares of Realty Income Corp (NYSE:O) in his portfolio.
United Parcel Service
The Redditor making $1,000 a month in dividend income owned 20 shares of United Parcel Service, Inc. (NYSE:UPS). The stock has a dividend yield of about 5% and 15 years of consecutive payout increases. However, it is down 15% over the past year. In July, the company reported second-quarter results that missed Wall Street estimates on both EPS and revenue. However, restarting its $1 billion stock buyback program gave investors something to cheer about.
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JPMorgan Equity Premium Income ETF
The Redditor who doubled his passive income and claimed to earn $1,000 a month had 578 shares of JPMorgan Equity Premium Income ETF (NYSE:JEPI) in his portfolio. JEPI, which has a monthly dividend yield of about 7%, makes money by investing in some of the most notable large-cap U.S. stocks and selling call options. JEPI is ideal for those looking for exposure to defensive stocks. JEPI usually underperforms during bull markets but protects investors against huge losses during bear markets, as most of its portfolio consists of large, defensive equities like Trane Technologies PLC (NYSE:TT), Southern Co (NYSE:SO), Progressive Corp (NYSE:PGR), among many others.
Schwab U.S. Dividend Equity ETF
Schwab U.S. Dividend Equity ETF (NYSE:SCHD) tracks the Dow Jones U.S. Dividend 100 Index and includes some of the safest dividend stocks, such as Home Depot, Coca-Cola, Verizon, Lockheed Martin, Pepsi and AbbVie. The Redditor shared portfolio details showing he had about 100 SCHD shares. The fund has a distribution yield of about 3.34%.
ExxonMobil
Though not a very high-yield dividend stock, Exxon Mobil Corp (NYSE:XOM) has about 40 consecutive years of dividend increases and solid fundamentals that make it an interesting name in the portfolio. The Redditor owned 110 shares of the company.
AbbVie
With a current dividend yield of 3.2%, AbbVie Inc. (NYSE:ABBV) was one of the important dividend stocks in the Redditor portfolio, making $1,000 a month. The screenshots shared by the investor showed his portfolio had 101 company shares. Over the past year, AbbVie shares have gained about 29%.
Wondering if your investments can get you to a $5,000,000 nest egg? Speak to a financial advisor today. SmartAsset’s free tool matches you up with up to three vetted financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you.
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This article Dividend Investor Who ‘Doubled’ His Passive Income to $1,000 a Month in Six Months Reveals Portfolio: Top 8 High-Yield Stocks originally appeared on Benzinga.com
Is the Options Market Predicting a Spike in Nexstar Media Stock?
Investors in Nexstar Media Group, Inc. NXST need to pay close attention to the stock based on moves in the options market lately. That is because the Dec 20, 2024 $95 Call had some of the highest implied volatility of all equity options today.
What is Implied Volatility?
Implied volatility shows how much movement the market is expecting in the future. Options with high levels of implied volatility suggest that investors in the underlying stocks are expecting a big move in one direction or the other. It could also mean there is an event coming up soon that may cause a big rally or a huge sell-off. However, implied volatility is only one piece of the puzzle when putting together an options trading strategy.
What do the Analysts Think?
Clearly, options traders are pricing in a big move for Nexstar Media shares, but what is the fundamental picture for the company? Currently, Nexstar Media is a Zacks Rank #5 (Strong Sell) in the Broadcast Radio and Television industry that ranks in the Top 41% of our Zacks Industry Rank. Over the last 60 days, no analyst increased the earnings estimates for the current quarter, while one has dropped the estimates. The net effect has taken our Zacks Consensus Estimate for the current quarter from $5.89 per share to $5.51 in that period.
Given the way analysts feel about Nexstar Media right now, this huge implied volatility could mean there’s a trade developing. Oftentimes, options traders look for options with high levels of implied volatility to sell premium. This is a strategy many seasoned traders use because it captures decay. At expiration, the hope for these traders is that the underlying stock does not move as much as originally expected.
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© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Curious About Cannabis Edibles? Fed Health Agency Funds Project To Study Use Among Young Adults
Washington State University (WSU) researchers have received a $670,000 grant from the National Institutes of Health (NIH) to tackle cannabis misuse among young adults.
The project, led by Stacey Hust and Jessica Willoughby, will focus on educating college students in three states where cannabis is legal. The states are Washington, Illinois and New York, reported WSU Insider.
A particular focus of the study is cannabis edibles, which are increasingly popular but often misunderstood.
The three-year NIH-funded initiative aims to develop and test a technology-based intervention designed to educate young adults on the risks of cannabis. The focus is set on edibles.
Edibles are a growing segment of the cannabis market. Yet, many users are unaware of the delayed onset of effects and misunderstand portion sizes, which can lead to accidental overconsumption.
“Adolescents and young adults are not necessarily educated consumers when it comes to cannabis,” said Hust. “Our research has shown that many do not understand the THC content in edibles or how to properly gauge serving sizes.”
Read Also: Top Brands In $2.2B Cannabis Edibles Market Include Wyld, Incredibles, Wana And Kiva
The intervention project includes a mixed-media video presentation. It will be hosted by a former cannabis marketer and is designed to correct these misconceptions by helping users assess cannabis products more effectively.
The program emphasizes reading labels and understanding THC levels, using examples like cannabis-infused sodas.
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Preliminary results have shown the intervention successfully increased cannabis knowledge and awareness of health risks.
Now, with the NIH funding, the WSU team will refine the program and test it on a larger scale, with plans to customize it for different states’ regulations.
Ultimately, the researchers hope to secure further funding for a national clinical trial to assess its long-term impact on cannabis use and misuse.
Cover: Photo by Kindelmedia via Pixels
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