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

First Financial Corp. In Focus

First Financial Corp. (THFF Quick QuoteTHFF - Free Report) is headquartered in Terre Haute, and is in the Finance sector. The stock has seen a price change of 6.95% since the start of the year. Currently paying a dividend of $0.51 per share, the company has a dividend yield of 4.13%. In comparison, the Banks - Midwest industry's yield is 3.28%, while the S&P 500's yield is 1.63%.

Looking at dividend growth, the company's current annualized dividend of $2.04 is up 51.1% from last year. Over the last 5 years, First Financial Corp. has increased its dividend 4 times on a year-over-year basis for an average annual increase of 15.55%. 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, First Financial Corp.'s payout ratio is 44%, which means it paid out 44% of its trailing 12-month EPS as dividend.

Earnings growth looks solid for THFF for this fiscal year. The Zacks Consensus Estimate for 2025 is $6.02 per share, with earnings expected to increase 50.50% 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.

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. During periods of rising interest rates, income investors must be mindful that high-yielding stocks tend to struggle. That said, they can take comfort from the fact that THFF is not only an attractive dividend play, but is also a compelling investment opportunity with a Zacks Rank of #1 (Strong Buy).