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.

Ventas in Focus

Ventas (VTR Quick QuoteVTR - Free Report) is headquartered in Chicago, and is in the Finance sector. The stock has seen a price change of 16.56% since the start of the year. Currently paying a dividend of $0.48 per share, the company has a dividend yield of 2.8%. In comparison, the REIT and Equity Trust - Other industry's yield is 5.27%, while the S&P 500's yield is 1.67%.

Taking a look at the company's dividend growth, its current annualized dividend of $1.92 is up 6.7% from last year. Over the last 5 years, Ventas has increased its dividend 1 times on a year-over-year basis for an average annual increase of 0.37%. Future dividend growth will depend on earnings growth as well as payout ratio, which is the proportion of a company's annual earnings per share that it pays out as a dividend. Ventas's current payout ratio is 56%, meaning it paid out 56% of its trailing 12-month EPS as dividend.

Looking at this fiscal year, VTR expects solid earnings growth. The Zacks Consensus Estimate for 2025 is $3.44 per share, representing a year-over-year earnings growth rate of 7.84%.

Bottom Line

Investors like dividends for many reasons; they greatly improve stock investing profits, decrease overall portfolio risk, and carry tax advantages, among others. 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 VTR is not only an attractive dividend play, but also represents a compelling investment opportunity with a Zacks Rank of #2 (Buy).