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Are You Looking for a High-Growth Dividend Stock? Hubbell (HUBB) Could Be a Great Choice

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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 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.

Hubbell in Focus

Headquartered in Shelton, Hubbell (HUBB - Free Report) is an Industrial Products stock that has seen a price change of 21.9% so far this year. Currently paying a dividend of $0.98 per share, the company has a dividend yield of 2.05%. In comparison, the Manufacturing - Electrical Utilities industry's yield is 2.07%, while the S&P 500's yield is 1.25%.

Looking at dividend growth, the company's current annualized dividend of $3.92 is up 5.7% from last year. In the past five-year period, Hubbell has increased its dividend 5 times on a year-over-year basis for an average annual increase of 9.41%. Future dividend growth will depend on earnings growth as well as payout ratio, which is the proportion of a company's annual earnings per share that it pays out as a dividend. Hubbell's current payout ratio is 52%. This means it paid out 52% of its trailing 12-month EPS as dividend.

Looking at this fiscal year, HUBB expects solid earnings growth. The Zacks Consensus Estimate for 2021 is $8.33 per share, with earnings expected to increase 9.89% 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.

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. During periods of rising interest rates, income investors must be mindful that high-yielding stocks tend to struggle. With that in mind, HUBB 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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