Getting big returns from financial portfolios, whether through stocks, bonds, ETFs, other securities, or a combination of all, is an investor's dream. But 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 Bancorp in Focus

Based in San Juan, First Bancorp (FBP Quick QuoteFBP - Free Report) is in the Finance sector, and so far this year, shares have seen a price change of 5%. Currently paying a dividend of $0.18 per share, the company has a dividend yield of 3.69%. In comparison, the Banks - Southeast industry's yield is 2.43%, while the S&P 500's yield is 1.59%.

Taking a look at the company's dividend growth, its current annualized dividend of $0.72 is up 12.5% from last year. Over the last 5 years, First Bancorp has increased its dividend 5 times on a year-over-year basis 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%, meaning 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, with earnings expected to increase 6.63% from the year ago period.

Bottom Line

Investors like dividends for many reasons; they greatly improve stock investing profits, decrease overall portfolio risk, and carry tax advantages, among others. It's important to keep in mind that not all companies provide 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. Income investors have to be mindful of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. That said, they can take comfort from the fact that FBP is not only an attractive dividend play, but is also a compelling investment opportunity with a Zacks Rank of #1 (Strong Buy).