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Are You Looking for a High-Growth Dividend Stock?

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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. 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.

Independent Bank Corp. In Focus

Independent Bank Corp. (INDB - Free Report) is headquartered in Hanover, and is in the Finance sector. The stock has seen a price change of -6.15% since the start of the year. The holding company for Rockland Trust is currently shelling out a dividend of $0.55 per share, with a dividend yield of 2.78%. This compares to the Banks - Northeast industry's yield of 2.52% and the S&P 500's yield of 1.64%.

Taking a look at the company's dividend growth, its current annualized dividend of $2.20 is up 5.8% from last year. Over the last 5 years, Independent Bank Corp. has increased its dividend 5 times on a year-over-year basis for an average annual increase of 7.18%. 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. Right now, Independent Bank Corp.'s payout ratio is 35%, which means it paid out 35% of its trailing 12-month EPS as dividend.

Earnings growth looks solid for INDB for this fiscal year. The Zacks Consensus Estimate for 2023 is $6.63 per share, which represents a year-over-year growth rate of 14.31%.

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.

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, INDB 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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