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 make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.

Brookfield Infrastructure Partners in Focus

Based in Hamilton, Brookfield Infrastructure Partners (BIP Quick QuoteBIP - Free Report) is in the Finance sector, and so far this year, shares have seen a price change of -12.23%. Currently paying a dividend of $0.38 per share, the company has a dividend yield of 5.86%. In comparison, the REIT and Equity Trust - Other industry's yield is 4.63%, while the S&P 500's yield is 1.59%.

Taking a look at the company's dividend growth, its current annualized dividend of $1.62 is up 5.9% from last year. Brookfield Infrastructure Partners has increased its dividend 4 times on a year-over-year basis over the last 5 years for an average annual increase of 3.30%. 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. Brookfield Infrastructure's current payout ratio is 52%. This means it paid out 52% of its trailing 12-month EPS as dividend.

BIP is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2024 is $3.32 per share, with earnings expected to increase 12.54% 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. But, not every company offers a quarterly payout.

High-growth firms or tech start-ups, for example, rarely provide their shareholders a dividend, while larger, more established companies that have more secure profits are often seen as the best dividend options. 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 BIP is not only an attractive dividend play, but is also a compelling investment opportunity with a Zacks Rank of #2 (Buy).