Getting big returns from financial portfolios, whether through stocks, bonds, ETFs, other securities, or a combination of all, is an investor's dream. 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 the distribution of a company's earnings paid out to shareholders; it's often viewed by its dividend yield, a metric that measures a 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 Mattoon, First Mid Bancshares (FMBH Quick QuoteFMBH - Free Report) is in the Finance sector, and so far this year, shares have seen a price change of 5.43%. The bank holding company is paying out a dividend of $0.24 per share at the moment, with a dividend yield of 2.47% compared to the Banks - Northeast industry's yield of 2.69% and the S&P 500's yield of 1.5%.

Looking at dividend growth, the company's current annualized dividend of $0.96 is up 2.1% from last year. Over the last 5 years, First Mid Bancshares has increased its dividend 4 times on a year-over-year basis for an average annual increase of 3.67%. 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. First Mid Bancshares's current payout ratio is 26%, meaning it paid out 26% of its trailing 12-month EPS as dividend.

Looking at this fiscal year, FMBH expects solid earnings growth. The Zacks Consensus Estimate for 2025 is $3.89 per share, which represents a year-over-year growth rate of 11.78%.

Investors like dividends for many reasons; they greatly improve stock investing profits, decrease overall portfolio risk, and carry tax advantages, among others. It's important to keep in mind that not all companies provide a quarterly payout.

High-growth firms or tech start-ups, for example, rarely provide their shareholders a dividend, while larger, more established companies that have more secure profits are often seen as the best dividend options. Income investors must be conscious 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 FMBH is not only an attractive dividend play, but is also a compelling investment opportunity with a Zacks Rank of #2 (Buy).