All investors love getting big returns from their portfolio, whether it's through stocks, bonds, ETFs, or other types of securities. 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.

Middlefield Banc Corp. In Focus

Headquartered in Middlefiled, Middlefield Banc Corp. (MBCN Quick QuoteMBCN - Free Report) is a Finance stock that has seen a price change of -7.66% so far this year. The company is currently shelling out a dividend of $0.21 per share, with a dividend yield of 3.24%. This compares to the Banks - Northeast industry's yield of 2.89% and the S&P 500's yield of 1.57%.

In terms of dividend growth, the company's current annualized dividend of $0.84 is up 5% from last year. Over the last 5 years, Middlefield Banc Corp. has increased its dividend 2 times on a year-over-year basis for an average annual increase of 8.05%. 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. Middlefield Banc's current payout ratio is 42%, meaning it paid out 42% of its trailing 12-month EPS as dividend.

MBCN is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2025 is $1.96 per share, with earnings expected to increase 2.08% from the year ago period.

Bottom Line

Investors like dividends for many reasons; they greatly improve stock investing profits, decrease overall portfolio risk, and carry tax advantages, among others. It's important to keep in mind that not all companies provide 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 must be conscious of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. With that in mind, MBCN 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).