Univest (UVSP) Could Be a Great Choice

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.

Univest in Focus

Headquartered in Souderton, Univest (UVSP) is a Finance stock that has seen a price change of -0.44% so far this year. The holding company for Univest Bank and Trust Co. Is paying out a dividend of $0.22 per share at the moment, with a dividend yield of 3% compared to the Banks - Northeast industry's yield of 2.82% and the S&P 500's yield of 1.6%.

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

UVSP is expecting earnings to expand this fiscal year as well. 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. 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. Income investors have to be mindful 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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