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.

Lakeland Financial in Focus

Based in Warsaw, Lakeland Financial (LKFN) is in the Finance sector, and so far this year, shares have seen a price change of -4.3%. Currently paying a dividend of $0.5 per share, the company has a dividend yield of 3.04%. In comparison, the Banks - Midwest industry's yield is 3.05%, while the S&P 500's yield is 1.54%.

Looking at dividend growth, the company's current annualized dividend of $2 is up 4.2% from last year. Over the last 5 years, Lakeland Financial has increased its dividend 4 times on a year-over-year basis for an average annual increase of 12.70%. 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. Right now, Lakeland Financial's payout ratio is 55%, which means it paid out 55% of its trailing 12-month EPS as dividend.

Looking at this fiscal year, LKFN expects solid earnings growth. The Zacks Consensus Estimate for 2025 is $3.70 per share, which represents a year-over-year growth rate of 6.63%.

Bottom Line

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.

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. That said, they can take comfort from the fact that LKFN is not only an attractive dividend play, but also represents a compelling investment opportunity with a Zacks Rank of #1 (Strong Buy).

Story Continues

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

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