Are You Looking for a High-Growth Dividend Stock? BB&T (BBT) Could Be a Great Choice

Getting big returns from financial portfolios, whether through stocks, bonds, ETFs, other securities, or a combination of all, is an investor's dream. 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 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.

BB&T in Focus

BB&T (BBT) is headquartered in Winston-Salem, and is in the Finance sector. The stock has seen a price change of 19.23% since the start of the year. The regional banking company is paying out a dividend of $0.41 per share at the moment, with a dividend yield of 3.14% compared to the Banks - Major Regional industry's yield of 2.94% and the S&P 500's yield of 1.87%.

Looking at dividend growth, the company's current annualized dividend of $1.62 is up 3.8% from last year. Over the last 5 years, BB&T has increased its dividend 5 times on a year-over-year basis for an average annual increase of 12.65%. 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, BB&T's payout ratio is 38%, which means it paid out 38% of its trailing 12-month EPS as dividend.

Looking at this fiscal year, BBT expects solid earnings growth. The Zacks Consensus Estimate for 2019 is $4.16 per share, which represents a year-over-year growth rate of 6.39%.

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 have to be mindful of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. With that in mind, BBT 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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