Smart Dividend Portfolio Edition #56: Secured Future
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Dear Investor,
Welcome to the 56th edition of TipRanks’ Smart Dividend Portfolio & Newsletter.
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Market-Moving News: April 14, 2025
Following a rocky start to April, U.S. markets bounced back and closed the week on a strong note. On Friday, the S&P 500 (SPX) gained 1.8%, while the Dow Jones Industrial Average (DJIA) surged 619 points (1.6%). Meanwhile, the tech-heavy Nasdaq Composite (NDAQ) rose 2.1%. For the week, the S&P 500 climbed 5.7%, the Dow added 5%, and the Nasdaq jumped 7.3%, marking their best weekly performance since November 2023.
U.S. markets had a bumpy ride last week. Stocks opened lower on Monday as new tariffs hit, and worries grew over trade ties with China. But things turned around midweek. On April 9, the U.S. put a 90-day pause on all new tariffs set on “Liberation Day,” which helped lift the major indexes. Then, on Friday night, the White House announced major tariff exemptions for key electronics like phones and laptops, giving tech stocks a lift.
However, in a dramatic U-turn, President Donald Trump clarified on Sunday in a post on his social media platform Truth Social that “There was no Tariff ‘exception’ announced on Friday [and] these products are subject to the existing 20% Fentanyl Tariffs, and they are just moving to a different Tariff ‘bucket.’” He added that China “treats us the worst” when it comes to trade, and said the U.S. is no longer letting unfair practices slide.
Meanwhile, Boston Fed President Susan Collins reassured investors that the central bank would act as needed to maintain financial stability. These updates cheered investors, helping the S&P 500, Dow, and Nasdaq all post solid gains by Friday. Still, with trade talks up in the air, markets may stay volatile in the weeks ahead.
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This Week’s Quality Dividend Stock Idea
Unum Group (UNM) is a provider of financial protection benefits specializing in disability, life, accident, and supplemental health insurance. Its operations span group and individual insurance products, including income protection and workplace benefits solutions. UNM serves employers and individuals across the U.S., U.K., and Poland, with a strong presence in the employee benefits market.
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Legacy of Innovation
Unum traces its origins to 1848 with the founding of Union Mutual Life Insurance Company in Maine. Initially focused on life insurance, the company expanded over the years, adapting to evolving consumer needs. In 1986, Union Mutual rebranded as Unum, signaling a strategic shift toward workplace benefits and disability insurance.
The 1990s brought significant growth through mergers, most notably Unum’s 1999 combination with Provident Companies, forming UnumProvident, the largest disability insurer in the U.S. In 2007, the company rebranded as Unum Group, reflecting its broader international presence and diversified offerings.
During the 2010s, Unum focused on product innovation and geographic expansion, particularly in the U.K., where it became a leading provider of workplace benefits. It also strengthened its voluntary benefits segment, addressing the rising demand for supplemental insurance. In 2018, Unum entered the dental and vision insurance markets, further diversifying its revenue streams.
The company has consistently invested in technological advancements to enhance its offerings and improve service delivery. Thus, Unum has integrated AI and automation into leave management, and has leveraged AI and machine learning in claims processing, underwriting, and benefits management to optimize customer experience and operational efficiency.
Additionally, in 2023 the company launched Gathr, an HR technology platform tailored for small businesses, demonstrating Unum’s focus on digital innovation in benefits administration. Meanwhile, the introduction of Unum Broker Connect enhances automation and API-driven integration for brokers, improving efficiency in managing benefits.
Today, with a market capitalization of $13.3 billion and annual revenues of approximately $12.9 billion, Unum Group is ranked #332 on the Fortune 500 list.
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Strategic Expansion
Unum has strategically leveraged acquisitions, divestitures, and partnerships to sharpen its competitive edge and streamline its operations. Over the years, the company has executed targeted moves to expand into new markets, enhance its product suite, and strengthen its core capabilities.
In 2016, Unum entered the U.S. dental and vision market with a $127 million acquisition of Starmount Life Insurance Company. This move diversified its employee benefits portfolio, broadening its appeal to clients. Two years later, in 2018, the company expanded its European presence by purchasing Pramerica Życie TUiR SA, a Polish financial protection provider tied to Prudential Financial. That same year, it acquired LeaveLogic, a tech innovator in leave management, boosting its digital capabilities. These acquisitions aligned with Unum’s goal to strengthen its global footprint and service offerings.
In line with a refined focus on core operations, Unum announced the sale of its Medical Stop Loss business to Amynta Group in July 2024. The divestiture aligns with the company’s ongoing efforts to streamline its offerings and allocate resources more efficiently toward growth-focused segments.
Beyond deals, strategic partnerships have fueled Unum’s evolution. In January 2025, it deepened a nearly decade-long collaboration with Workday, earning the title of Strategic Workday Wellness Partner. This alliance leverages Workday’s Human Capital Management system to integrate benefits and leave management seamlessly, enhancing client experiences through advanced data solutions.
Complementing these efforts, the company launched HR Connect and Total Leave—initiatives designed to bridge HR and benefits data. These offerings streamline operations, optimize services, and cement client ties.
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Operational Strength
Unum Group operates a diversified insurance business focused on employee benefits, providing financial protection products primarily in the U.S., U.K., and Poland. The company generates revenue primarily through insurance premiums, investment income, and fee-based services. Its core product lines include disability insurance, life insurance, supplemental health coverage, and voluntary benefits, catering to both employers and individual policyholders.
Unum’s business model is built on underwriting discipline, risk management, and a long-term investment strategy. The company maintains a strong pricing strategy and policy renewal structure, ensuring steady premium inflows. Its reserves are invested in a well-diversified portfolio of fixed-income securities, generating consistent investment income that complements its underwriting profits.
The company operates through four key segments. The U.S. arm provides group disability, life, accidental death, and supplemental coverage. Internationally, it serves the U.K. and Poland with similar offerings, while its Colonial Life division focuses on accident, sickness, disability, and critical illness products. A separate Closed Block segment houses legacy long-term care (LTC) and discontinued policies. LTC insurance is a complex liability stretching decades and demands robust safeguards.
Recognizing the inherent risks of LTC, Unum has implemented capital protection strategies and currently holds $2.6 billion in reserve coverage for this kind of insurance.
This year, a pivotal move reshaped its risk profile. The company struck a deal with Fortitude Re, effective January 1, 2025, to reinsure $3.4 billion of LTC reserves, that is 19% of its LTC block, and 20% of its in-force multi-life individual disability insurance (IDI) premium, roughly $120 million. This transaction is subject to regulatory approval and is likely to close later this year. This deal unlocks a $100 million capital benefit for UNM. By offloading a chunk of its LTC burden, the company not only fortifies its financial position but also frees resources to fuel its high-performing core operations.
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Earnings Momentum
Over the past three years, Unum has demonstrated a steady financial growth trajectory, with revenues and earnings expanding at a CAGR of 2.4% and 25.5%, respectively. This growth has been powered by rising premium income, strong sales momentum, operational efficiency, and an improving benefits ratio. Benefits ratio is a key profitability driver indicating that Unum is paying out fewer claims relative to premiums, boosting its profitability.
In Q4 2024, however, UNM’s results missed expectations, with adjusted earnings per share hitting $2.03, up 13.4% from the prior year, with revenue growing 2.9% to $3.24 billion. For FY24, the company posted adjusted EPS of $8.44 per on $12.88 billion in revenue, fueled by 5% year-over-year premium growth across its core operations, stronger persistency rates, and a standout performance from its Colonial Life segment. Persistency rate measures the percentage of policyholders who renew their policies annually. This rate for long-term and short-term disability improved to 93.3% and 91.7%, for the year, from 90.8% and 88.9% in FY23, respectively.
At the end of FY24, UNM’s liquidity remained strong at $2 billion, backed by a robust 430% Risk-Based Capital (RBC) ratio, signaling financial strength. The RBC ratio is a key measure of solvency and sits well above regulatory minimums. The company’s book value per share, excluding accumulated other comprehensive income or loss, reached $75.51, reflecting a 9% CAGR over a decade.
The company is expected to announce its Q1 results on April 29. Looking ahead to Q1, analysts predict earnings of $2.19 per share (up sequentially by 7.9%) and revenue of $3.34 billion (up sequentially by 3.1%). Looking ahead to FY25, Unum has adjusted its guidance following the Fortitude Re reinsurance deal, ceding individual disability income (IDI) premiums. The company now expects premium growth between 3% and 6% (down from its prior forecast in the range of 4% to 7%) and earnings growth of 6% to 10% (versus its previous estimate between 8% and 12%).
Nonetheless, Unum expects to maintain over $2 billion in liquidity and an RBC ratio between 425% and 450% in FY25. Its projected debt-to-equity ratio of 20% to 22% remains close to the insurance industry average, and its current ratio of 23% is supported by a healthy interest coverage ratio of 12.3x. Credit agencies have reaffirmed a stable outlook for UNM, with a “BBB+” from Fitch and a “Baa2” from Moody’s, signaling continued financial resilience.
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Shareholder Rewards
Unum has a history of consistent dividend growth, making it a Dividend Contender. However, the company paused an increase in its dividend between 2019 and 2021 due to the challenging economic environment amid the COVID-19 pandemic, as it prioritized financial stability over dividend growth.
Recently, the company announced a quarterly dividend of $0.42 per share, paid on May 16 to stockholders of record as of April 25, 2025. Over the past three years, dividends have grown at a CAGR of 11.1%, with a current dividend yield of 2.3% far exceeding the financial sector average of 1.62%. With a modest payout ratio, Unum’s dividends are well covered by earnings.
The company is also increasingly deploying capital in the form of stock buybacks. In Q4, Unum executed accelerated share repurchases totaling $471 million, contributing to a total shareholder return of $1.3 billion for the year—more than double the $500 million returned in 2023. A new $1 billion buyback program kicks off April 1, 2025, with plans to repurchase $500 million to $1 billion in FY25, alongside dividends between $300 million and $330 million.
This follows a stellar 2024, when core operations delivered a return on equity (ROE) exceeding 20%, ranking Unum in the insurance industry’s top 30%.
Over the past year, UNM’s stock has surged by 45.3%, fueled by consistent revenue growth, profitability, and a fortress-like capital position. Despite this outperformance, the stock remains attractively valued, trading at a 15% discount to the broad financial sector and its peers, with a Price to-Earnings ratio of 8.75x. In addition, when accounting for discounted future cash flow, UNM appears undervalued by about 52%.
Wall Street analysts are increasingly optimistic, with some analysts forecasting gains of 47.8% thanks to its solid capital position and its reinsurance deal with Fortitude Re slashing long-term care risk. Unum’s average price target currently signals an upside potential of 27.7% for the next 12 months.
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Investing Takeaway
Unum Group stands out as a compelling dividend play in the financial sector, supported by a strong capital position and consistent earnings growth. The company has resumed a solid record of dividend hikes post-COVID, growing dividends at an 11.1% CAGR over the past three years. Unum’s dividends are well-supported by its robust free cash flow and earnings base. Furthermore, with the stock trading at a discount to sector peers, income-oriented investors may find Unum an attractive opportunity for both its dividend yield and capital appreciation.
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Dividend Investor Portfolio
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Portfolio News
▣ BlackRock (BLK) reported mixed Q1 results on Friday. Adjusted earnings per share were $11.30, up 15% year-over-year, beating Wall Street’s estimate of $10.14. The investment company generated Q1 revenue of $5.28 billion, a surprise miss compared to analysts’ Q1 estimate of $5.32 billion for the quarter. The company reported $84 billion of total quarterly net inflows driven by 3% annualized organic asset growth, led by record inflows in Q1 for its iShares ETF.
▣ The ex-dividend date for EOG Resources (EOG) is April 17th, with the payment due on April 30th.
▣ JPMorgan Chase (JPM), the largest US bank by assets, reported first-quarter net income of $14.6 billion, a 9% increase from last year, easily surpassing Wall Street’s expectations of $13.15 billion. Earnings per share reached $5.07, well above the predicted $4.63. This strong performance sent JPMorgan shares up 13.1% for the week, almost enough to pull the stock into positive territory year-to-date.
▣ BLK (BLK) has raised its quarterly cash dividend by 2% to $5.21 per share payable on March 24 to shareholders of record on March 7, 2025.
▣ The Federal Trade Commission (FTC) is seeking public comment on a petition from Scott Sheffield, founder and former CEO of Pioneer Natural Resources, to vacate a consent order related to Exxon Mobil’s (XOM) acquisition of Pioneer. The public has until May 12, 2025, to submit comments on the petition to set aside the consent order. After this comment period, the FTC will vote on how to proceed. Earlier this year, the FTC finalized a consent order restricting Exxon from appointing Scott Sheffield, Pioneer’s founder and former CEO, to its board or allowing him to serve in an advisory capacity. For five years, Exxon was also barred from appointing most Pioneer employees or directors to its board. The FTC imposed these conditions to prevent potential coordination in the crude oil market, especially with OPEC members. The order reflected the Biden administration’s broader efforts to address antitrust concerns tied to major oil mergers.
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Recent Trades
None at the moment, although we are considering adding a stock to our portfolio when the market conditions allow for an attractive entry point. Stay tuned.
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Portfolio Attributes
| Dividend Portfolio Yield |
Expected Dividend Growth | Expected Annual Income |
| 3.97% | +8.13% | $5,924.69 |
| Yield-on-Cost Adjusted, Weighted |
Average Analyst 12-Month Growth Outlook | 10K Per Stock at the Time of Purchase |
Current Portfolio
| Name | EX-Dividend Date | Payment Date | Yield on Cost | Annual DPS |
| Automatic Data Processing (ADP) | Jun 12, 2025 | Jul 01, 2025 | 2.46% | $6.16 |
| Allianz SE ADR (ALIZY) | May 09, 2025 | May 28, 2025 | 6.09% | $1.52 |
| Amgen (AMGN) | May 16, 2025 | Jun 09, 2025 | 3.27% | $9.52 |
| BlackRock (BLK) | Jun 09, 2025 | Jun 26, 2025 | 2.61% | $20.84 |
| Bank of Nova Scotia (BNS) | Jul 03, 2025 | Jul 29, 2025 | 5.98% | $2.97 |
| EOG Resources (EOG) | Jul 17, 2025 | Jul 31, 2025 | 3.06% | $3.90 |
| IBM (IBM) | May 09, 2025 | Jun 10, 2025 | 3.13% | $6.68 |
| JPMorgan Chase (JPM) | Jul 08, 2025 | Jul 31, 2025 | 3.2% | $5.60 |
| Kroger (KR) | May 15, 2025 | Jun 02, 2025 | 2.82% | $1.28 |
| LyondellBasell (LYB) | Jun 03, 2025 | Jun 10, 2025 | 5.62% | $5.36 |
| PepsiCo (PEP) | Jun 09, 2025 | Jun 26, 2025 | 3.64% | $5.44 |
| Philip Morris (PM) | Jun 23, 2025 | Jul 17, 2025 | 6.06% | $5.40 |
| Qualcomm (QCOM) | May 29, 2025 | Jun 26, 2025 | 2.36% | $3.56 |
| VICI Properties (VICI) | Jun 18, 2025 | Jul 03, 2025 | 5.22% | $1.73 |
| ExxonMobil (XOM) | May 14, 2025 | Jun 10, 2025 | 3.64% | $3.96 |
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Click here for more stock market analysis from TipRanks Macro & Markets research analyst Yulia Vaiman
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Disclaimer
The information contained in this article represents the views and opinions of the writer only, and not the views or opinions of TipRanks or its affiliates and should be considered for informational purposes only. TipRanks makes no warranties about the completeness, accuracy, or reliability of such information. Nothing in this article should be taken as a recommendation or solicitation to purchase or sell securities. Nothing in the article constitutes legal, professional, investment, and/or financial advice and/or takes into account the specific needs and/or requirements of an individual, nor does any information in the article constitute a comprehensive or complete statement of the matters or subject discussed therein. TipRanks and its affiliates disclaim all liability or responsibility with respect to the content of the article, and any action taken upon the information in the article is at your own and sole risk. The link to this article does not constitute an endorsement or recommendation by TipRanks or its affiliates. Past performance is not indicative of future results, prices, or performance.
