Whether it's through stocks, bonds, ETFs, or other types of securities, all investors love seeing their portfolios score big returns. 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 make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.

JPMorgan Chase & Co. In Focus

JPMorgan Chase & Co. (JPM Quick QuoteJPM - Free Report) is headquartered in New York, and is in the Finance sector. The stock has seen a price change of 26.11% since the start of the year. The company is currently shelling out a dividend of $1.15 per share, with a dividend yield of 2.14%. This compares to the Banks - Major Regional industry's yield of 3.44% and the S&P 500's yield of 1.58%.

Looking at dividend growth, the company's current annualized dividend of $4.60 is up 13.6% from last year. In the past five-year period, JPMorgan Chase & Co. has increased its dividend 3 times on a year-over-year basis for an average annual increase of 5.21%. 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. JPMorgan Chase & Co.'s current payout ratio is 27%, meaning it paid out 27% of its trailing 12-month EPS as dividend.

Earnings growth looks solid for JPM for this fiscal year. The Zacks Consensus Estimate for 2024 is $16.78 per share, with earnings expected to increase 3.39% from the year ago period.

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. It's important to keep in mind that not all companies provide 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, JPM presents a compelling investment opportunity; it's not only an attractive dividend play, but the stock also boasts a strong Zacks Rank of #2 (Buy).