Whether it's through stocks, bonds, ETFs, or other types of securities, all investors love seeing their portfolios score big returns. But for income investors, generating consistent cash flow from each of your liquid investments is your primary focus.

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.

National Fuel Gas in Focus

Headquartered in Williamsville, National Fuel Gas (NFG Quick QuoteNFG - Free Report) is a Utilities stock that has seen a price change of 14.55% so far this year. The energy company is paying out a dividend of $0.46 per share at the moment, with a dividend yield of 2.48% compared to the Utility - Gas Distribution industry's yield of 2.6% and the S&P 500's yield of 1.45%.

Looking at dividend growth, the company's current annualized dividend of $1.82 is up 1.1% from last year. Over the last 5 years, National Fuel Gas has increased its dividend 5 times on a year-over-year basis for an average annual increase of 2.24%. 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, National Fuel Gas's payout ratio is 39%, which means it paid out 39% of its trailing 12-month EPS as dividend.

Earnings growth looks solid for NFG for this fiscal year. The Zacks Consensus Estimate for 2022 is $6.07 per share, which represents a year-over-year growth rate of 41.49%.

Bottom Line

Investors like dividends for many reasons; they greatly improve stock investing profits, decrease overall portfolio risk, and carry tax advantages, among others. 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 must be conscious of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. With that in mind, NFG presents a compelling investment opportunity; it's not only an attractive dividend play, but the stock also boasts a strong Zacks Rank of #1 (Strong Buy).