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.

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 Worcester, Hanover Insurance Group (THG Quick QuoteTHG - Free Report) is in the Finance sector, and so far this year, shares have seen a price change of 15.81%. The insurance company is currently shelling out a dividend of $0.90 per share, with a dividend yield of 2.01%. This compares to the Insurance - Property and Casualty industry's yield of 0.67% and the S&P 500's yield of 1.49%.

Looking at dividend growth, the company's current annualized dividend of $3.60 is up 4.3% from last year. Over the last 5 years, Hanover Insurance Group has increased its dividend 5 times on a year-over-year basis for an average annual increase of 6.68%. 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. Hanover Insurance's current payout ratio is 22%, meaning it paid out 22% of its trailing 12-month EPS as dividend.

Looking at this fiscal year, THG expects solid earnings growth. The Zacks Consensus Estimate for 2025 is $15.68 per share, which represents a year-over-year growth rate of 17.54%.

Investors like dividends for a variety of different reasons, from tax advantages and decreasing overall portfolio risk to considerably improving stock investing profits. It's important to keep in mind that not all companies provide 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 have to be mindful of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. With that in mind, THG presents a compelling investment opportunity; it's not only an attractive dividend play, but the stock also boasts a strong Zacks Rank of #2 (Buy).