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Are You Looking for a High-Growth Dividend Stock? Broadridge Financial Solutions (BR) Could Be a Great Choice

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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.

Cash flow can come from bond interest, interest from other types of investments, and of course, 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.

Broadridge Financial Solutions in Focus

Broadridge Financial Solutions (BR - Free Report) is headquartered in Lake Success, and is in the Business Services sector. The stock has seen a price change of 6.68% since the start of the year. The technology outsourcing company is currently shelling out a dividend of $0.98 per share, with a dividend yield of 2.01%. This compares to the Outsourcing industry's yield of 0.48% and the S&P 500's yield of 2.04%.

Looking at dividend growth, the company's current annualized dividend of $1.94 is up 32.9% from last year. In the past five-year period, Broadridge Financial Solutions has increased its dividend 5 times on a year-over-year basis for an average annual increase of 14.42%. 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. Broadridge Financial's current payout ratio is 44%. This means it paid out 44% of its trailing 12-month EPS as dividend.

BR is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2018 is $4.68 per share, with earnings expected to increase 11.69% from the year ago period.

Bottom Line

From greatly improving stock investing profits and reducing overall portfolio risk to providing tax advantages, investors like dividends for a variety of different reasons. However, not all companies offer 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 must be conscious of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. With that in mind, BR 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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