Whether it's through stocks, bonds, ETFs, or other types of securities, all investors love seeing their portfolios score big returns. 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 make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.

Hanmi Financial in Focus

Headquartered in Los Angeles, Hanmi Financial (HAFC Quick QuoteHAFC - Free Report) is a Finance stock that has seen a price change of 7.87% so far this year. The bank holding company is paying out a dividend of $0.27 per share at the moment, with a dividend yield of 4.24% compared to the Banks - West industry's yield of 3.08% and the S&P 500's yield of 1.54%.

In terms of dividend growth, the company's current annualized dividend of $1.08 is up 8% from last year. Over the last 5 years, Hanmi Financial has increased its dividend 3 times on a year-over-year basis for an average annual increase of 27.60%. 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. Hanmi Financial's current payout ratio is 51%. This means it paid out 51% of its trailing 12-month EPS as dividend.

Looking at this fiscal year, HAFC expects solid earnings growth. The Zacks Consensus Estimate for 2025 is $2.54 per share, with earnings expected to increase 23.90% 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. 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. 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 HAFC is not only an attractive dividend play, but is also a compelling investment opportunity with a Zacks Rank of #2 (Buy).