Stocks are up in 2022, and the S&P 500 is down 17% year-to-date. Given the current environment, it’s hard to find stocks that haven’t fallen.

However, some stocks can do well even in this market. In particular, value stocks and dividend stocks have not seen nearly the declines that their growth stock counterparts are experiencing.

Data by YCharts.

One dividend stock that reported solid earnings and impressed investors with its forward-looking outlook is group insurance company Grupo Unum (UNM 1.05% ) . Although the company faced difficulties when the pandemic began in 2020, things are starting to look up for the company.

The pandemic caused great obstacles to Unum in 2020

Unum Group offers life insurance along with other benefits such as vision and dental coverage, primarily to employer networks.

The emergence of the global pandemic in 2020 affected Unum Group’s earnings in different ways. US unemployment rates reached 14% in the early days of the pandemic and falling employment levels caused premium growth to slow for Unum Group. The company also faced higher payouts due to the pandemic, as seniors were hit the hardest by the pandemic. Finally, low interest rates were a stumbling block for the insurer, which struggled to generate much interest income from its holdings.

Unum is turning the corner now

The workforce has mostly recovered since then and Unum Group posted a strong quarter of earnings in the first quarter of 2022. The insurer saw premium income rise 1% from the same quarter last year. More importantly, Unum experienced 31% growth in first quarter adjusted operating income year over year.

What got investors optimistic was management’s updated guidance for 2022. Unum expects adjusted operating income per share to grow 15% to 20% for the year. This was a significant increase from their previous forecast of 4% to 7% growth. The increased guidance made investors bullish, and the day after the earnings release, Unum Group’s share price rose nearly 14%.

Headwinds have turned into tailwinds that can work in Unum’s favor

What is working in Unum Group’s favor is a reversal of the problems that plagued it when the pandemic first emerged. CEO Richard McKenney spoke about how “the current business environment is favorable for our company, with higher interest rates and a strong job market resulting in a better earnings outlook.”

Going forward, Unum executives expect premium growth to remain strong and claims related to COVID-19 to decline. Falling unemployment rates mean more employees in the workforce, which would increase the amount companies will pay for employee benefits, which is great for Unum Group.

The company also expects to see its earnings ratio fall. Earnings ratio is a key measure for insurers like Unum Group. This metric measures the ratio of claims paid to total premiums charged to customers.

Unum’s group life benefit ratio peaked at around 96% in 2021 (the lower the ratio, the better). The insurer expects this ratio to improve from 80% to 85% this year and settle in its historical range of 70% to 75% in the coming years.

A strong balance will also help

Another thing that works in Unum Group’s favor is its strong balance sheet. The company currently has $1.3 billion in cash and assets on hand and is 25% leveraged, its lowest level since 2014.

This strong capital position puts the insurer in a position to put cash to work in higher-interest bearing assets and return money to shareholders through share buybacks and dividends.

Unum’s board has approved $200 million in share buybacks annually and the dividend gives investors a solid 3.5%. The company is trading at a cheap valuation with a P/E ratio of just 7.5. This company has favorable tailwinds for your business and that makes it a solid stock to add as part of a diversified portfolio.

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