Univest (UVSP) 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. But 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 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.

Univest (UVSP) is headquartered in Souderton, and is in the Finance sector. The stock has seen a price change of 7.35% since the start of the year. Currently paying a dividend of $0.22 per share, the company has a dividend yield of 2.78%. In comparison, the Banks - Northeast industry's yield is 2.65%, while the S&P 500's yield is 1.52%.

Looking at dividend growth, the company's current annualized dividend of $0.88 is up 4.8% from last year. Over the last 5 years, Univest has increased its dividend 2 times on a year-over-year basis for an average annual increase of 1.61%. 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. Univest's current payout ratio is 32%, meaning it paid out 32% of its trailing 12-month EPS as dividend.

Earnings growth looks solid for UVSP for this fiscal year. The Zacks Consensus Estimate for 2025 is $2.76 per share, which represents a year-over-year growth rate of 10.40%.

From greatly improving stock investing profits and reducing overall portfolio risk to providing tax advantages, investors like dividends for a variety of different reasons. However, not all companies offer 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. During periods of rising interest rates, income investors must be mindful that high-yielding stocks tend to struggle. With that in mind, UVSP 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).

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

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Source Zacks-com