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Are You Looking for a High-Growth Dividend Stock? Artesian Resources (ARTNA) 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 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 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 make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.

Artesian Resources in Focus

Headquartered in Newark, Artesian Resources (ARTNA) is a Utilities stock that has seen a price change of -6.85% so far this year. The water resource management company is currently shelling out a dividend of $0.25 per share, with a dividend yield of 2.88%. This compares to the Utility - Water Supply industry's yield of 1.82% and the S&P 500's yield of 1.63%.

Looking at dividend growth, the company's current annualized dividend of $1 is up 1.6% from last year. In the past five-year period, Artesian Resources has increased its dividend 5 times on a year-over-year basis for an average annual increase of 2.96%. Future dividend growth will depend on earnings growth as well as payout ratio, which is the proportion of a company's annual earnings per share that it pays out as a dividend. Right now, Artesian Resources's payout ratio is 57%, which means it paid out 57% of its trailing 12-month EPS as dividend.

ARTNA is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2020 is $1.68 per share, with earnings expected to increase 5% from the year ago period.

Bottom Line

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.

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, ARTNA 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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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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