Are You Looking for a High-Growth Dividend Stock? Sun Life (SLF) Could Be a Great Choice

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.

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 make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.

Sun Life in Focus

Sun Life (SLF) is headquartered in Toronto, and is in the Finance sector. The stock has seen a price change of 27.12% since the start of the year. The financial services company is currently shelling out a dividend of $0.39 per share, with a dividend yield of 3.72%. This compares to the Insurance - Life Insurance industry's yield of 0.66% and the S&P 500's yield of 1.86%.

Looking at dividend growth, the company's current annualized dividend of $1.57 is up 6.2% from last year. Sun Life has increased its dividend 3 times on a year-over-year basis over the last 5 years for an average annual increase of 5.91%. 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, Sun Life's payout ratio is 42%, which means it paid out 42% of its trailing 12-month EPS as dividend.

Earnings growth looks solid for SLF for this fiscal year. The Zacks Consensus Estimate for 2019 is $3.76 per share, with earnings expected to increase 0.27% 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. Income investors must be conscious of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. That said, they can take comfort from the fact that SLF is not only an attractive dividend play, but also represents a compelling investment opportunity with a Zacks Rank of #2 (Buy).

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