Are You Looking for a High-Growth Dividend Stock?

All investors love getting big returns from their portfolio, whether it's through stocks, bonds, ETFs, or other types of securities. 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.

Univest in Focus

Based in Souderton, Univest (UVSP) is in the Finance sector, and so far this year, shares have seen a price change of 1.93%. The holding company for Univest Bank and Trust Co. Is paying out a dividend of $0.21 per share at the moment, with a dividend yield of 2.93% compared to the Banks - Northeast industry's yield of 2.77% and the S&P 500's yield of 1.6%.

Looking at dividend growth, the company's current annualized dividend of $0.88 is up 4.8% from last year. Univest has increased its dividend 1 times on a year-over-year basis over the last 5 years for an average annual increase of 1.42%. 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, Univest's payout ratio is 32%, which means it paid out 32% of its trailing 12-month EPS as dividend.

Earnings growth looks solid for UVSP for this fiscal year. The Zacks Consensus Estimate for 2025 is $2.63 per share, which represents a year-over-year growth rate of 5.20%.

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. It's important to keep in mind that not all companies provide a quarterly payout.

Big, established firms that have more secure profits are often seen as the best dividend options, but it's fairly uncommon to see high-growth businesses or tech start-ups offer their stockholders a dividend. Income investors must be conscious of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. With that in mind, UVSP 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).

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

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