Are You Looking for a High-Growth Dividend Stock?

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 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 account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.

Popular (BPOP) is headquartered in Hato Rey, and is in the Finance sector. The stock has seen a price change of 25.52% since the start of the year. Currently paying a dividend of $0.90 per share, the company has a dividend yield of 2.3%. In comparison, the Banks - Southeast industry's yield is 1.97%, while the S&P 500's yield is 1.42%.

Looking at dividend growth, the company's current annualized dividend of $3.60 is up 24.1% from last year. Over the last 5 years, Popular has increased its dividend 4 times on a year-over-year basis for an average annual increase of 12.77%. 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. Popular's current payout ratio is 20%, meaning it paid out 20% of its trailing 12-month EPS as dividend.

Earnings growth looks solid for BPOP for this fiscal year. The Zacks Consensus Estimate for 2026 is $15.72 per share, with earnings expected to increase 29.38% from the year ago period.

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.

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. That said, they can take comfort from the fact that BPOP is not only an attractive dividend play, but also represents a compelling investment opportunity with a Zacks Rank of #2 (Buy).

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

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