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 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 account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.

Banco Santander in Focus

Based in Madrid, Banco Santander (SAN Quick QuoteSAN - Free Report) is in the Finance sector, and so far this year, shares have seen a price change of 81.36%. The financial holding company is currently shelling out a dividend of $0.09 per share, with a dividend yield of 2.19%. This compares to the Banks - Foreign industry's yield of 3.4% and the S&P 500's yield of 1.6%.

Taking a look at the company's dividend growth, its current annualized dividend of $0.18 is up 20% from last year. Over the last 5 years, Banco Santander has increased its dividend 4 times on a year-over-year basis for an average annual increase of 17.90%. 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. Banco Santander's current payout ratio is 18%, meaning it paid out 18% of its trailing 12-month EPS as dividend.

Earnings growth looks solid for SAN for this fiscal year. The Zacks Consensus Estimate for 2025 is $0.97 per share, with earnings expected to increase 16.87% from the year ago period.

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. But, not every company offers 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. With that in mind, SAN 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).