All investors love getting big returns from their portfolio, whether it's through stocks, bonds, ETFs, or other types of securities. However, when you're an income investor, your primary focus is generating consistent cash flow from each of your liquid investments.

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.

Based in Dunmore, Peoples Financial Services (PFIS Quick QuotePFIS - Free Report) is in the Finance sector, and so far this year, shares have seen a price change of -0.25%. The holding company for Peoples Security Bank and Trust is currently shelling out a dividend of $0.62 per share, with a dividend yield of 4.84%. This compares to the Banks - Northeast industry's yield of 2.72% and the S&P 500's yield of 1.55%.

Looking at dividend growth, the company's current annualized dividend of $2.47 is up 20.2% from last year. Over the last 5 years, Peoples Financial Services has increased its dividend 4 times on a year-over-year basis for an average annual increase of 11.43%. 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. Peoples Financial Services's current payout ratio is 52%, meaning it paid out 52% of its trailing 12-month EPS as dividend.

PFIS is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2025 is $5.97 per share, with earnings expected to increase 58.36% from the year ago period.

From greatly improving stock investing profits and reducing overall portfolio risk to providing tax advantages, investors like dividends for a variety of different reasons. It's important to keep in mind that not all companies provide 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 PFIS is not only an attractive dividend play, but also represents a compelling investment opportunity with a Zacks Rank of #1 (Strong Buy).