Whether it's through stocks, bonds, ETFs, or other types of securities, all investors love seeing their portfolios score big returns. But for income investors, generating consistent cash flow from each of your liquid investments is your primary focus.

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.

First Bancorp in Focus

Headquartered in San Juan, First Bancorp (FBP Quick QuoteFBP - Free Report) is a Finance stock that has seen a price change of 8.39% so far this year. The holding company for FirstBank Puerto Rico is paying out a dividend of $0.18 per share at the moment, with a dividend yield of 3.57% compared to the Banks - Southeast industry's yield of 2.41% and the S&P 500's yield of 1.54%.

In terms of dividend growth, the company's current annualized dividend of $0.72 is up 12.5% from last year. First Bancorp has increased its dividend 5 times on a year-over-year basis over the last 5 years for an average annual increase of 31.93%. Any future dividend growth will depend on both earnings growth and the company's payout ratio; a payout ratio is the proportion of a firm's annual earnings per share that it pays out as a dividend. First Bancorp's current payout ratio is 39%. This means it paid out 39% of its trailing 12-month EPS as dividend.

Earnings growth looks solid for FBP for this fiscal year. The Zacks Consensus Estimate for 2025 is $1.93 per share, representing a year-over-year earnings growth rate of 6.63%.

Bottom Line

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