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 make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.

First Savings Financial in Focus

First Savings Financial (FSFG) is headquartered in Jeffersonville, and is in the Finance sector. The stock has seen a price change of 0.3% since the start of the year. The bank holding company is paying out a dividend of $0.16 per share at the moment, with a dividend yield of 2.4% compared to the Financial - Savings and Loan industry's yield of 3.02% and the S&P 500's yield of 1.63%.

Taking a look at the company's dividend growth, its current annualized dividend of $0.64 is up 8.5% from last year. In the past five-year period, First Savings Financial has increased its dividend 5 times on a year-over-year basis for an average annual increase of 22.80%. 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. Right now, First Savings Financial's payout ratio is 26%, which means it paid out 26% of its trailing 12-month EPS as dividend.

Looking at this fiscal year, FSFG expects solid earnings growth. The Zacks Consensus Estimate for 2025 is $2.90 per share, with earnings expected to increase 70.59% from the year ago period.

Bottom Line

Investors like dividends for a variety of different reasons, from tax advantages and decreasing overall portfolio risk to considerably improving stock investing profits. But, not every company offers 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. That said, they can take comfort from the fact that FSFG is not only an attractive dividend play, but is also a compelling investment opportunity with a Zacks Rank of #1 (Strong Buy).

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

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