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 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 the distribution of a company's earnings paid out to shareholders; it's often viewed by its dividend yield, a metric that measures a 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.

The Hartford in Focus

Headquartered in Hartford, The Hartford (HIG) is a Finance stock that has seen a price change of 5.3% so far this year. The insurance and financial services company is currently shelling out a dividend of $0.38 per share, with a dividend yield of 2.12%. This compares to the Insurance - Multi line industry's yield of 1.76% and the S&P 500's yield of 1.52%.

Taking a look at the company's dividend growth, its current annualized dividend of $1.54 is up 7.3% from last year. In the past five-year period, The Hartford has increased its dividend 5 times on a year-over-year basis for an average annual increase of 10.63%. 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. The Hartford's current payout ratio is 21%, meaning it paid out 21% 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. However, not all companies offer 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 have to be mindful of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. 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).

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The Hartford Financial Services Group, Inc. (HIG) : Free Stock Analysis Report
 
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