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Univest (UVSP) 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 for income investors, generating consistent cash flow from each of your liquid investments is your primary focus.

While cash flow can come from bond interest or interest from other types of investments, income investors hone in on 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.

Based in Souderton, Univest (UVSP - Free Report) is in the Finance sector, and so far this year, shares have seen a price change of 29.96%. The holding company for Univest Bank and Trust Co. is currently shelling out a dividend of $0.23 per share, with a dividend yield of 2.16%. This compares to the Banks - Northeast industry's yield of 2.16% and the S&P 500's yield of 1.42%.

Looking at dividend growth, the company's current annualized dividend of $0.92 is up 5.7% from last year. Over the last 5 years, Univest has increased its dividend 2 times on a year-over-year basis for an average annual increase of 1.61%. 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. Univest's current payout ratio is 27%, meaning it paid out 27% of its trailing 12-month EPS as dividend.

UVSP is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2026 is $3.67 per share, which represents a year-over-year growth rate of 17.25%.

Investors like dividends for many reasons; they greatly improve stock investing profits, decrease overall portfolio risk, and carry tax advantages, among others. It's important to keep in mind that not all companies provide a quarterly payout.

For instance, it's a rare occurrence when a tech start-up or big growth business offers its shareholders a dividend. It's more common to see larger companies with more established profits give out dividends. During periods of rising interest rates, income investors must be mindful that high-yielding stocks tend to struggle. With that in mind, UVSP presents a compelling investment opportunity; it's not only an attractive dividend play, but the stock also boasts a strong Zacks Rank of #2 (Buy).

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