Are You Looking for a High-Growth Dividend Stock?
Whether it's through stocks, bonds, ETFs, or other types of securities, all investors love seeing their portfolios score big returns. However, 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.
The Hartford in Focus
The Hartford (HIG) is headquartered in Hartford, and is in the Finance sector. The stock has seen a price change of -2.68% since the start of the year. The insurance and financial services company is currently shelling out a dividend of $0.38 per share, with a dividend yield of 2.29%. This compares to the Insurance - Multi line industry's yield of 1.87% and the S&P 500's yield of 1.78%.
In terms of dividend growth, the company's current annualized dividend of $1.54 is up 7.3% from last year. The Hartford has increased its dividend 4 times on a year-over-year basis over the last 5 years for an average annual increase of 9.46%. Any future dividend growth will depend on both earnings growth and the company's payout ratio; a payout ratio is the proportion of a firm's annual earnings per share that it pays out as a dividend. Right now, The Hartford's payout ratio is 22%, which means it paid out 22% of its trailing 12-month EPS as dividend.
HIG is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2022 is $6.95 per share, which represents a year-over-year growth rate of 13.01%.
Bottom Line
Investors like dividends for many reasons; they greatly improve stock investing profits, decrease overall portfolio risk, and carry tax advantages, among others. It's important to keep in mind that not all companies provide a quarterly payout.
For instance, it's a rare occurrence when a tech start-up or big growth business offers their shareholders a dividend. It's more common to see larger companies with more established profits give out dividends. During periods of rising interest rates, income investors must be mindful that high-yielding stocks tend to struggle. With that in mind, HIG 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).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
The Hartford Financial Services Group, Inc. (HIG) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research
