Whether it's through stocks, bonds, ETFs, or other types of securities, all investors love seeing their portfolios score big returns. 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.

Eagle Bancorp Montana, Inc. In Focus

Eagle Bancorp Montana, Inc. (EBMT Quick QuoteEBMT - Free Report) is headquartered in Helena, and is in the Finance sector. The stock has seen a price change of 3.78% since the start of the year. Currently paying a dividend of $0.14 per share, the company has a dividend yield of 3.58%. In comparison, the Banks - Midwest industry's yield is 3.22%, while the S&P 500's yield is 1.6%.

In terms of dividend growth, the company's current annualized dividend of $0.57 is up 0.9% from last year. Eagle Bancorp Montana, Inc. has increased its dividend 5 times on a year-over-year basis over the last 5 years for an average annual increase of 9.81%. 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. Eagle Bancorp Montana's current payout ratio is 40%, meaning it paid out 40% of its trailing 12-month EPS as dividend.

Earnings growth looks solid for EBMT for this fiscal year. The Zacks Consensus Estimate for 2025 is $1.70 per share, which represents a year-over-year growth rate of 37.10%.

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.

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. 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 EBMT is not only an attractive dividend play, but is also a compelling investment opportunity with a Zacks Rank of #2 (Buy).