Are You Looking for a High-Growth Dividend Stock?

Getting big returns from financial portfolios, whether through stocks, bonds, ETFs, other securities, or a combination of all, is an investor's dream. But for income investors, generating consistent cash flow from each of your liquid investments is your primary focus.

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.

Lakeland Financial in Focus

Headquartered in Warsaw, Lakeland Financial (LKFN) is a Finance stock that has seen a price change of -13.98% so far this year. The holding company for Lake City Bank is paying out a dividend of $0.5 per share at the moment, with a dividend yield of 3.38% compared to the Banks - Midwest industry's yield of 3.26% and the S&P 500's yield of 1.59%.

Looking at dividend growth, the company's current annualized dividend of $2 is up 4.2% from last year. In the past five-year period, Lakeland Financial has increased its dividend 4 times on a year-over-year basis for an average annual increase of 12.70%. Looking ahead, future dividend growth will be dependent on earnings growth and payout ratio, which is the proportion of a company's annual earnings per share that it pays out as a dividend. Lakeland Financial's current payout ratio is 55%, meaning it paid out 55% of its trailing 12-month EPS as dividend.

Earnings growth looks solid for LKFN for this fiscal year. The Zacks Consensus Estimate for 2025 is $3.70 per share, representing a year-over-year earnings growth rate of 6.63%.

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.

High-growth firms or tech start-ups, for example, rarely provide their shareholders a dividend, while larger, more established companies that have more secure profits are often seen as the best dividend options. Income investors have to be mindful of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. That said, they can take comfort from the fact that LKFN is not only an attractive dividend play, but also represents a compelling investment opportunity with a Zacks Rank of #2 (Buy).

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This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research