Are You Looking for a High-Growth Dividend Stock? BlackRock (BLK) 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. 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 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.

BlackRock in Focus

Headquartered in New York, BlackRock (BLK) is a Finance stock that has seen a price change of 6.44% so far this year. The investment firm is paying out a dividend of $3.63 per share at the moment, with a dividend yield of 2.71% compared to the Financial - Investment Management industry's yield of 1.93% and the S&P 500's yield of 1.72%.

Looking at dividend growth, the company's current annualized dividend of $14.52 is up 10% from last year. In the past five-year period, BlackRock has increased its dividend 5 times on a year-over-year basis for an average annual increase of 12.50%. 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. BlackRock's current payout ratio is 48%. This means it paid out 48% of its trailing 12-month EPS as dividend.

Looking at this fiscal year, BLK expects solid earnings growth. The Zacks Consensus Estimate for 2020 is $29.76 per share, which represents a year-over-year growth rate of 4.49%.

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.

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, BLK presents a compelling investment opportunity; it's not only an attractive dividend play, but the stock also boasts a strong Zacks Rank of #2 (Buy).

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
 
BlackRock, Inc. (BLK) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.