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 account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.

Citizens Financial Services in Focus

Based in Mansfield, Citizens Financial Services (CZFS Quick QuoteCZFS - Free Report) is in the Finance sector, and so far this year, shares have seen a price change of -6.73%. Currently paying a dividend of $0.5 per share, the company has a dividend yield of 3.35%. In comparison, the Banks - Northeast industry's yield is 2.86%, while the S&P 500's yield is 1.56%.

Taking a look at the company's dividend growth, its current annualized dividend of $1.98 is up 1% from last year. Over the last 5 years, Citizens Financial Services has increased its dividend 4 times on a year-over-year basis for an average annual increase of 2.52%. 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. Citizens Financial Services's current payout ratio is 32%. This means it paid out 32% of its trailing 12-month EPS as dividend.

Looking at this fiscal year, CZFS expects solid earnings growth. The Zacks Consensus Estimate for 2025 is $6.54 per share, which represents a year-over-year growth rate of 8.82%.

Bottom Line

From greatly improving stock investing profits and reducing overall portfolio risk to providing tax advantages, investors like dividends for a variety of different reasons. 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. With that in mind, CZFS presents a compelling investment opportunity; it's not only an attractive dividend play, but the stock also boasts a strong Zacks Rank of #2 (Buy).