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

Headquartered in Birmingham, Regions Financial (RF) is a Finance stock that has seen a price change of 12.21% so far this year. Currently paying a dividend of $0.26 per share, the company has a dividend yield of 3.49%. In comparison, the Banks - Southeast industry's yield is 1.85%, while the S&P 500's yield is 1.35%.

Looking at dividend growth, the company's current annualized dividend of $1.06 is up 2.9% from last year. Over the last 5 years, Regions Financial has increased its dividend 4 times on a year-over-year basis for an average annual increase of 13.34%. 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. Regions Financial's current payout ratio is 42%, meaning it paid out 42% of its trailing 12-month EPS as dividend.

Looking at this fiscal year, RF expects solid earnings growth. The Zacks Consensus Estimate for 2026 is $2.63 per share, with earnings expected to increase 12.88% 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. However, not all companies offer 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. With that in mind, RF 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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