Are You Looking for a High-Growth Dividend Stock? The Hartford (HIG) Could Be a Great Choice

All investors love getting big returns from their portfolio, whether it's through stocks, bonds, ETFs, or other types of securities. But 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 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 make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.

The Hartford in Focus

Headquartered in Hartford, The Hartford (HIG) is a Finance stock that has seen a price change of 27.78% so far this year. The insurance and financial services company is currently shelling out a dividend of $0.3 per share, with a dividend yield of 2.11%. This compares to the Insurance - Multi line industry's yield of 2.06% and the S&P 500's yield of 1.87%.

In terms of dividend growth, the company's current annualized dividend of $1.20 is up 9.1% from last year. In the past five-year period, The Hartford has increased its dividend 3 times on a year-over-year basis for an average annual increase of 12.20%. 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. Right now, The Hartford's payout ratio is 26%, which means it paid out 26% of its trailing 12-month EPS as dividend.

HIG is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2019 is $5.34 per share, with earnings expected to increase 23.33% from the year ago period.

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. 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 their 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. With that in mind, HIG 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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