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.

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.

First Financial Bancorp (FFBC) is headquartered in Cincinnati, and is in the Finance sector. The stock has seen a price change of 23.06% since the start of the year. The holding company for First Financial Bank is paying out a dividend of $0.26 per share at the moment, with a dividend yield of 3.38% compared to the Banks - Midwest industry's yield of 2.53% and the S&P 500's yield of 1.38%.

Looking at dividend growth, the company's current annualized dividend of $1.04 is up 6.1% from last year. Over the last 5 years, First Financial Bancorp has increased its dividend 1 times on a year-over-year basis for an average annual increase of 0.82%. 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. First Financial's current payout ratio is 32%, meaning it paid out 32% of its trailing 12-month EPS as dividend.

Earnings growth looks solid for FFBC for this fiscal year. The Zacks Consensus Estimate for 2026 is $3.09 per share, which represents a year-over-year growth rate of 5.46%.

Investors like dividends for a variety of different reasons, from tax advantages and decreasing overall portfolio risk to considerably improving stock investing profits. It's important to keep in mind that not all companies provide 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. That said, they can take comfort from the fact that FFBC is not only an attractive dividend play, but is also 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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