Back to top

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

Read MoreHide Full Article

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 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.

BlackRock in Focus

Headquartered in New York, BlackRock (BLK - Free Report) is a Finance stock that has seen a price change of 7.02% so far this year. The investment firm is paying out a dividend of $3.3 per share at the moment, with a dividend yield of 3.14% compared to the Financial - Investment Management industry's yield of 2.97% and the S&P 500's yield of 1.93%.

Taking a look at the company's dividend growth, its current annualized dividend of $13.20 is up 9.8% from last year. BlackRock has increased its dividend 5 times on a year-over-year basis over the last 5 years for an average annual increase of 11.61%. 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, BlackRock's payout ratio is 50%, which means it paid out 50% of its trailing 12-month EPS as dividend.

Earnings growth looks solid for BLK for this fiscal year. The Zacks Consensus Estimate for 2019 is $27.38 per share, representing a year-over-year earnings growth rate of 1.67%.

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. But, not every company offers a quarterly payout.

For instance, it's a rare occurrence when a tech start-up or big growth business offers their shareholders a dividend. It's more common to see larger companies with more established profits give out dividends. 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, BLK 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).


In-Depth Zacks Research for the Tickers Above


Normally $25 each - click below to receive one report FREE:


BlackRock, Inc. (BLK) - free report >>

Published in