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

East West Bancorp in Focus

Headquartered in Pasadena, East West Bancorp (EWBC Quick QuoteEWBC - Free Report) is a Finance stock that has seen a price change of -10.97% so far this year. The bank holding company is currently shelling out a dividend of $0.6 per share, with a dividend yield of 2.81%. This compares to the Banks - West industry's yield of 3.33% and the S&P 500's yield of 1.65%.

In terms of dividend growth, the company's current annualized dividend of $2.40 is up 9.1% from last year. Over the last 5 years, East West Bancorp has increased its dividend 5 times on a year-over-year basis for an average annual increase of 18.60%. 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, East West Bancorp's payout ratio is 29%, which means it paid out 29% of its trailing 12-month EPS as dividend.

Earnings growth looks solid for EWBC for this fiscal year. The Zacks Consensus Estimate for 2025 is $8.74 per share, which represents a year-over-year growth rate of 5.30%.

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. It's important to keep in mind that not all companies provide a quarterly payout.

Big, established firms that have more secure profits are often seen as the best dividend options, but it's fairly uncommon to see high-growth businesses or tech start-ups offer their stockholders a dividend. 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, EWBC is a compelling investment opportunity. Not only is it a strong dividend play, but the stock currently sits at a Zacks Rank of 3 (Hold).