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 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.

Based in Buffalo, M&T Bank Corporation (MTB) is in the Finance sector, and so far this year, shares have seen a price change of 25.69%. Currently paying a dividend of $1.50 per share, the company has a dividend yield of 2.37%. In comparison, the Banks - Major Regional industry's yield is 2.8%, while the S&P 500's yield is 1.32%.

Looking at dividend growth, the company's current annualized dividend of $6.00 is up 5.3% from last year. Over the last 5 years, M&T Bank Corporation has increased its dividend 3 times on a year-over-year basis for an average annual increase of 5.36%. 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. M&T Bank's current payout ratio is 31%, meaning it paid out 31% of its trailing 12-month EPS as dividend.

Earnings growth looks solid for MTB for this fiscal year. The Zacks Consensus Estimate for 2026 is $19.42 per share, representing a year-over-year earnings growth rate of 12.91%.

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.

High-growth firms or tech start-ups, for example, rarely provide their shareholders a dividend, while larger, more established companies that have more secure profits are often seen as the best dividend options. 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, MTB 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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