Getting big returns from financial portfolios, whether through stocks, bonds, ETFs, other securities, or a combination of all, is an investor's dream. However, 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 Jasper, German American Bancorp (GABC Quick QuoteGABC - Free Report) is in the Finance sector, and so far this year, shares have seen a price change of -2.19%. The financial services holding company is currently shelling out a dividend of $0.29 per share, with a dividend yield of 2.95%. This compares to the Banks - Midwest industry's yield of 3.29% and the S&P 500's yield of 1.49%.

Looking at dividend growth, the company's current annualized dividend of $1.16 is up 7.4% from last year. Over the last 5 years, German American Bancorp has increased its dividend 5 times on a year-over-year basis for an average annual increase of 8.99%. 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. German American Bancorp's current payout ratio is 37%, meaning it paid out 37% of its trailing 12-month EPS as dividend.

Earnings growth looks solid for GABC for this fiscal year. The Zacks Consensus Estimate for 2025 is $3.38 per share, representing a year-over-year earnings growth rate of 19.43%.

Investors like dividends for a variety of different reasons, from tax advantages and decreasing overall portfolio risk to considerably improving stock investing profits. However, not all companies offer a quarterly payout.

For instance, it's a rare occurrence when a tech start-up or big growth business offers its shareholders a dividend. It's more common to see larger companies with more established profits give out dividends. 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 GABC is not only an attractive dividend play, but also represents a compelling investment opportunity with a Zacks Rank of #2 (Buy).