Are You Looking for a High-Growth Dividend Stock?

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

Based in San Juan, OFG Bancorp (OFG) is in the Finance sector, and so far this year, shares have seen a price change of 28.09%. The financial holding company is paying out a dividend of $0.35 per share at the moment, with a dividend yield of 2.67% compared to the Banks - Northeast industry's yield of 2.19% and the S&P 500's yield of 1.33%.

Looking at dividend growth, the company's current annualized dividend of $1.40 is up 16.7% from last year. Over the last 5 years, OFG Bancorp has increased its dividend 5 times on a year-over-year basis for an average annual increase of 36.70%. 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. OFG's current payout ratio is 28%, meaning it paid out 28% of its trailing 12-month EPS as dividend.

Looking at this fiscal year, OFG expects solid earnings growth. The Zacks Consensus Estimate for 2026 is $5.06 per share, which represents a year-over-year growth rate of 10.48%.

Investors like dividends for many reasons; they greatly improve stock investing profits, decrease overall portfolio risk, and carry tax advantages, among others. 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. Income investors have to be mindful of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. With that in mind, OFG presents a compelling investment opportunity; it's not only an attractive dividend play, but the stock also boasts a strong Zacks Rank of #1 (Strong Buy).

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

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