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.

While cash flow can come from bond interest or interest from other types of investments, income investors hone in on 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.

Enterprise Financial Services in Focus

Enterprise Financial Services (EFSC Quick QuoteEFSC - Free Report) is headquartered in Clayton, and is in the Finance sector. The stock has seen a price change of -6.35% since the start of the year. The financial holding company is paying out a dividend of $0.3 per share at the moment, with a dividend yield of 2.27% compared to the Banks - Midwest industry's yield of 3.21% and the S&P 500's yield of 1.62%.

Looking at dividend growth, the company's current annualized dividend of $1.20 is up 13.2% from last year. Over the last 5 years, Enterprise Financial Services has increased its dividend 3 times on a year-over-year basis for an average annual increase of 11.56%. 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. Enterprise Financial Services's current payout ratio is 23%. This means it paid out 23% of its trailing 12-month EPS as dividend.

EFSC is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2025 is $5.15 per share, which represents a year-over-year growth rate of 5.53%.

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.

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. That said, they can take comfort from the fact that EFSC is not only an attractive dividend play, but is also a compelling investment opportunity with a Zacks Rank of #2 (Buy).