Updated 3/6/25
CNO Financial Group isn’t the biggest name in the insurance sector, but it has quietly built a strong reputation by focusing on middle-income Americans. Based in Carmel, Indiana, the company operates under well-known brands like Bankers Life, Colonial Penn, and Washington National.
While this isn’t a high-growth stock, it has been a steady performer for income-focused investors. CNO has a history of returning capital to shareholders through dividends while maintaining a disciplined approach to financial management. With a current price of $38.78, the stock has pulled back slightly, but its fundamentals remain intact. For those seeking a blend of income and long-term stability, CNO presents an intriguing opportunity.
Key Dividend Metrics
💰 Dividend Yield: 1.61% (Lower than its 5-year average of 2.29%)
📈 Dividend Growth Rate: Modest but consistent
🔄 Payout Ratio: 16.84% (Low and well-covered by earnings)
📅 Ex-Dividend Date: March 10, 2025
💵 Next Payment Date: March 24, 2025
📊 5-Year Average Dividend Yield: 2.29%
⚖ Dividend Safety: Strong, backed by stable cash flow
Dividend Overview
CNO pays an annual dividend of $0.64 per share, which equates to a yield of 1.61%. While this yield is lower than what some dividend investors might prefer, it’s well-supported by earnings. The company has a payout ratio of just 16.84%, meaning it keeps the majority of its profits for reinvestment and future growth.
One thing to note is that CNO’s five-year average dividend yield is higher at 2.29%. This suggests that the stock has seen some price appreciation, which has lowered the current yield. Investors looking for long-term income may still find value in CNO, even if the immediate yield isn’t the highest.
Dividend Growth and Safety
CNO’s approach to dividends is conservative but steady. The company has been consistent in its payouts, prioritizing sustainability over aggressive increases. Given its low payout ratio, there is plenty of room for future dividend hikes.
A big factor in dividend safety is cash flow, and CNO delivers here. The company generated $537 million in free cash flow over the past year, providing a comfortable cushion for dividends. Another positive sign is the company’s return on equity, which stands at 17.14%. This indicates management is effectively using shareholder capital, an important factor when assessing dividend security.
Chart Analysis
Price Trend and Moving Averages
The stock has been in a clear uptrend for the past year, with higher highs and higher lows forming consistently. The 50-day moving average (orange line) has remained above the 200-day moving average (blue line), confirming that the stock is in a long-term bullish phase. Recently, however, the stock has pulled back slightly, closing at $39.70, just above the 50-day moving average.
The fact that price remains well above the 200-day moving average shows that the longer-term trend is still intact. However, the recent dip suggests that the stock might be testing support at the 50-day moving average. If it holds above this level, it could continue its upward trajectory. If it falls below, a deeper pullback toward the 200-day moving average might be on the table.
Volume and Market Participation
Volume levels have remained relatively stable, with occasional spikes that align with price surges. A notable volume increase occurred in early October, signaling strong buying interest that pushed the stock higher. Since then, volume has normalized but remains healthy.
The recent decline in price does not appear to be accompanied by a major volume spike, which suggests this pullback may be more of a natural consolidation rather than aggressive selling pressure. If volume picks up on a down move, that could be a sign that sentiment is shifting.
RSI and Momentum
The Relative Strength Index (RSI) has remained mostly in the higher range over the past several months, reflecting the strong uptrend. However, it has started to decline slightly, signaling that momentum may be cooling off.
The RSI is still above the midpoint, meaning the stock isn’t in oversold territory, but it is no longer in the overbought zone either. This suggests that while the stock may not be at risk of a sharp decline, it may need a period of consolidation before making its next big move.
Recent Price Action
The last few trading sessions have seen some volatility, with a range between $40.52 at the high and $39.62 at the low. The stock opened at $40.39 but closed lower at $39.70, indicating some intraday selling pressure. The price action shows hesitation near the recent highs, suggesting that buyers may be taking a breather.
If the stock can reclaim its recent highs with strong volume, it could signal another leg higher. However, if it continues to struggle around the $40 mark and dips below the 50-day moving average, it might need to find lower support before resuming its trend.
Analyst Ratings
In recent months, CNO Financial Group has caught the attention of analysts, resulting in a mix of upgrades and downgrades. The consensus 12-month price target among analysts stands at approximately $43.80, reflecting a modest upside from current levels.
📈 Upgrades
🔹 Piper Sandler – Upgraded from Neutral to Overweight on April 16, 2024, with a price target of $29. The firm pointed to improving financial metrics and a strategic shift toward more profitable product lines as key reasons for the upgrade.
🔹 Royal Bank of Canada (RBC) – Raised its price target multiple times throughout the past year:
✅ July 31, 2024 – Increased from $30 to $38, maintaining an Outperform rating due to positive earnings trends.
✅ November 4, 2024 – Raised to $40, citing strong guidance and favorable growth trends.
✅ February 10, 2025 – Boosted to $45, reinforcing confidence in CNO’s strategic execution and long-term stability.
📉 Downgrades
🔻 Evercore ISI – Downgraded CNO from In Line to Underperform on January 4, 2024, but raised the price target from $24 to $26. Analysts expressed concerns over slowing revenue growth and profit margin pressures.
🔻 BMO Capital – Initiated coverage on January 23, 2025, with a Market Perform rating and a price target of $38. Their stance reflects a neutral outlook, balancing CNO’s strengths against industry challenges.
These mixed ratings suggest that while CNO is making strides in its business strategy, some analysts remain cautious about potential revenue headwinds and industry competition.
Earnings Report Summary
CNO Financial Group just released its latest earnings report, and there’s plenty to unpack. The company delivered strong results, with earnings and revenue both coming in above expectations, showing that its strategy is paying off.
Fourth Quarter Highlights
The company posted net income of $166.1 million, or $1.58 per share, which is a huge jump from the $36.3 million it reported in the same quarter last year. That’s a major improvement, showing that CNO has been able to grow profits despite industry challenges.
Earnings per share on an adjusted basis landed at $1.31, beating analyst expectations, which were around $1.07. Revenue also came in stronger than expected at $1.139 billion, well above the forecasted $980.1 million.
Full-Year Performance
Looking at the full year, net income totaled $404 million, or $3.74 per share, marking another big increase from the prior year. Operating income for 2024 reached $1.07 billion, showing that CNO’s efficiency and profitability have been moving in the right direction.
How Different Segments Performed
The company’s life insurance segment saw solid growth, contributing to the revenue gains. Meanwhile, health insurance remained steady, maintaining its consistent performance. These results indicate that CNO’s core business lines are holding up well.
Financial Strength and Debt
CNO is also in a good position when it comes to cash. The company reported $1.96 billion in total cash as of the end of the year, which gives it plenty of flexibility. On the other hand, total debt stood at $4.62 billion, leading to a debt-to-equity ratio of 184.79%. That’s on the higher side, but with strong cash flow and profitability, the company seems well-equipped to manage it.
What’s Next?
Looking ahead, CNO’s leadership remains optimistic. They’ve highlighted ongoing strategies aimed at strengthening the business and delivering more value to shareholders. While challenges remain in the industry, the company’s latest earnings report suggests it has momentum on its side.
All in all, CNO put up a solid performance, beating expectations and demonstrating resilience in a competitive market. With strong earnings and a solid financial foundation, it looks like the company is in a good spot heading into the next phase of its growth.
Financial Health and Stability
Looking at CNO’s financials, the picture is mostly positive, though there are some areas to watch.
Strengths:
✔ Strong operating cash flow ($627.7M over the past year)
✔ Healthy profit margin (9.08%)
✔ High operating margin (24.84%)
✔ Large cash reserves ($1.96B in total cash)
Areas of Concern:
⚠ High debt levels ($4.62B in total debt, with a debt-to-equity ratio of 184.79%)
⚠ Declining revenue (-6.3% year-over-year)
One potential red flag is CNO’s debt-to-equity ratio of nearly 185%. That’s on the higher end, and in a rising rate environment, interest expenses can eat into profits. However, the company has a sizable cash position of nearly $2 billion, which helps offset some of this risk.
Revenue has also declined by 6.3% over the past year, which isn’t ideal. However, the company has managed its costs well, resulting in a massive 357.6% increase in quarterly earnings year-over-year. That suggests management is focusing on profitability even as top-line growth slows.
Valuation and Stock Performance
CNO isn’t an expensive stock by traditional valuation metrics. The price-to-earnings (P/E) ratio sits at 10.61 based on trailing earnings and 10.18 on a forward basis. Compared to the broader financial sector, this is a reasonable valuation.
Key Valuation Metrics:
🔹 P/E Ratio: 10.61 (TTM), 10.18 (Forward)
🔹 Price-to-Book Ratio: 1.60
🔹 Price-to-Sales Ratio: 0.97
The stock is currently trading above its 200-day moving average ($34.72) but below its 50-day moving average ($39.26), which suggests some short-term consolidation. Over the past year, CNO has traded between $24.92 and $42.41, meaning the current price is closer to the upper end of its range.
Risks and Considerations
All investments carry risk, and CNO is no exception. Here are some key factors to keep in mind:
⚠ Revenue Decline: Sales dropped by 6.3% year-over-year. While profits have remained strong, a prolonged revenue slowdown could impact future earnings and dividends.
⚠ High Debt Load: With a debt-to-equity ratio of nearly 185%, CNO has significant financial obligations. Higher interest rates could increase borrowing costs.
⚠ Market Sensitivity: With a beta of 1.04, the stock tends to move in line with the broader market. While not excessively volatile, it’s still influenced by economic trends.
⚠ Low Dividend Yield: At 1.61%, CNO’s yield isn’t particularly high. Investors looking for immediate income may prefer stocks with higher yields. However, CNO’s low payout ratio provides room for future increases.
Final Thoughts
CNO Financial Group is not the kind of stock that will grab headlines, but it has quietly built a reputation for stability. The company offers a well-covered dividend with room for growth, backed by strong cash flow and disciplined financial management.
For investors seeking a steady financial stock with a sustainable dividend, CNO is worth considering. However, those looking for a high-yield investment may find better options elsewhere. The company’s debt levels and revenue trends should also be monitored going forward.
At its current valuation, CNO appears fairly priced. For long-term investors who value consistency and financial strength, it could be a solid addition to a dividend portfolio.
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