Dividend Investors Won't Want to Overlook This Beaten-Down Growth Stock

Many dividend investors focus too much on a stock's current dividend yield. That can shortchange their returns.

That's clear from the total returns generated by dividend stocks over the last half-century. While dividend payers have produced a 9.2% average annual return, according to data from Ned Davis Research and Hartford Funds, there's a huge disparity. Dividend growers and initiators have produced a 10.2% average annual total return, while companies with no change in their dividend policy have only delivered a 6.6% average annual total return.

That strong returns data for dividend initiators and growers is why dividend-focused investors shouldn't overlook Paycom Software (NYSE: PAYC). While the cloud-based payroll company currently offers a seemingly paltry payout (it yields 0.7%, about 50% less than the S 500 index), it just initiated that dividend last year. Further, it should have no problem growing its payout in the future. That puts it in an excellent position to produce attractive total returns.