Getting big returns from financial portfolios, whether through stocks, bonds, ETFs, other securities, or a combination of all, is an investor's dream. 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 account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.

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 10% since the start of the year. The holding company for First Financial Bank is paying out a dividend of $0.51 per share at the moment, with a dividend yield of 4.01% compared to the Banks - Midwest industry's yield of 3.21% and the S&P 500's yield of 1.59%.

Taking a look at the company's dividend growth, its current annualized dividend of $2.04 is up 51.1% from last year. In the past five-year period, First Financial Corp. has increased its dividend 4 times on a year-over-year basis for an average annual increase of 15.55%. Future dividend growth will depend on earnings growth as well as payout ratio, which is the proportion of a company's annual earnings per share that it pays out as a dividend. First Financial Corp.'s current payout ratio is 44%. This means it paid out 44% of its trailing 12-month EPS as dividend.

Looking at this fiscal year, THFF expects solid earnings growth. The Zacks Consensus Estimate for 2025 is $6.02 per share, which represents a year-over-year growth rate of 50.50%.

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.

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. During periods of rising interest rates, income investors must be mindful that high-yielding stocks tend to struggle. With that in mind, THFF 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).