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Are You Looking for a High-Growth Dividend Stock? The Hartford (HIG) Could Be a Great Choice

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All investors love getting big returns from their portfolio, whether it's through stocks, bonds, ETFs, or other types of securities. 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 make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.

The Hartford in Focus

Based in Hartford, The Hartford (HIG - Free Report) is in the Finance sector, and so far this year, shares have seen a price change of 2.16%. The insurance and financial services company is paying out a dividend of $0.38 per share at the moment, with a dividend yield of 2.18% compared to the Insurance - Multi line industry's yield of 1.71% and the S&P 500's yield of 1.45%.

Looking at dividend growth, the company's current annualized dividend of $1.54 is up 7.3% from last year. Over the last 5 years, The Hartford has increased its dividend 4 times on a year-over-year basis for an average annual increase of 10.70%. 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. The Hartford's current payout ratio is 25%, meaning it paid out 25% of its trailing 12-month EPS as dividend.

Looking at this fiscal year, HIG expects solid earnings growth. The Zacks Consensus Estimate for 2022 is $6.80 per share, which represents a year-over-year growth rate of 10.57%.

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