Why Novo Nordisk (NVO) is a Great Dividend Stock Right Now

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 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.Novo Nordisk in FocusNovo Nordisk (NVO) is headquartered in Bagsvaerd, and is in the Medical sector. The stock has seen a price change of -13.58% since the start of the year. Currently paying a dividend of $0.82 per share, the company has a dividend yield of 2.2%. In comparison, the Large Cap Pharmaceuticals industry's yield is 2.17%, while the S&P 500's yield is 1.59%.Looking at dividend growth, the company's current annualized dividend of $1.64 is up 59.8% from last year. In the past five-year period, Novo Nordisk has increased its dividend 5 times on a year-over-year basis for an average annual increase of 22.48%. 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. Novo Nordisk's current payout ratio is 48%. This means it paid out 48% of its trailing 12-month EPS as dividend.NVO is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2025 is $3.87 per share, which represents a year-over-year growth rate of 17.99%.Bottom LineFrom greatly improving stock investing profits and reducing overall portfolio risk to providing tax advantages, investors like dividends for a variety of different reasons. But, not every company offers 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, NVO 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).5 Stocks Set to DoubleEach was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in the coming year. While not all picks can be winners, previous recommendations have soared +112%, +171%, +209% and +232%.Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.Today, See These 5 Potential Home Runs >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Novo Nordisk A/S (NVO): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks