Are You Looking for a High-Growth Dividend Stock?

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.

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.

Headquartered in Fitzgerald, Colony Bankcorp (CBAN) is a Finance stock that has seen a price change of 12.74% so far this year. The bank holding company is paying out a dividend of $0.12 per share at the moment, with a dividend yield of 2.39% compared to the Banks - Southeast industry's yield of 1.94% and the S&P 500's yield of 1.41%.

Looking at dividend growth, the company's current annualized dividend of $0.48 is up 4.3% from last year. Over the last 5 years, Colony Bankcorp has increased its dividend 5 times on a year-over-year basis for an average annual increase of 3.01%. 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. Colony Bankcorp's current payout ratio is 26%, meaning it paid out 26% of its trailing 12-month EPS as dividend.

CBAN is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2026 is $1.91 per share, with earnings expected to increase 6.70% from the year ago period.

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. 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, CBAN 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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This article originally published on Zacks Investment Research (zacks.com).

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