Whether it's through stocks, bonds, ETFs, or other types of securities, all investors love seeing their portfolios score big returns. 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 make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.
Headquartered in Souderton, Univest (UVSP) is a Finance stock that has seen a price change of 20.04% so far this year. The holding company for Univest Bank and Trust Co. is paying out a dividend of $0.23 per share at the moment, with a dividend yield of 2.34% compared to the Banks - Northeast industry's yield of 2.29% 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 26%, meaning it paid out 26% 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 $3.60 per share, with earnings expected to increase 15.02% 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. 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. That said, they can take comfort from the fact that UVSP is not only an attractive dividend play, but is also a compelling investment opportunity with a Zacks Rank of #2 (Buy).
7 Best Stocks for the Next 30 Days
Just released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers "Most Likely for Early Price Pops."
Since 1988, the full list has beaten the market more than 2X over with an average gain of +23.9% per year. So be sure to give these hand picked 7 your immediate attention.
See them now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Univest Corporation of Pennsylvania (UVSP): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).