Getting big returns from financial portfolios, whether through stocks, bonds, ETFs, other securities, or a combination of all, is an investor's dream. However, when you're an income investor, your primary focus is generating consistent cash flow from each of your liquid investments.

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.

Old Republic International in Focus

Headquartered in Chicago, Old Republic International (ORI Quick QuoteORI - Free Report) is a Finance stock that has seen a price change of 1.88% so far this year. Currently paying a dividend of $0.29 per share, the company has a dividend yield of 3.15%. In comparison, the Insurance - Multi line industry's yield is 1.84%, while the S&P 500's yield is 1.59%.

In terms of dividend growth, the company's current annualized dividend of $1.16 is up 9.4% from last year. Over the last 5 years, Old Republic International has increased its dividend 5 times on a year-over-year basis for an average annual increase of 6.29%. 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. Old Republic's current payout ratio is 31%, meaning it paid out 31% of its trailing 12-month EPS as dividend.

ORI is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2025 is $3.20 per share, which represents a year-over-year growth rate of 5.61%.

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. However, not all companies offer 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. During periods of rising interest rates, income investors must be mindful that high-yielding stocks tend to struggle. With that in mind, ORI 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).