Getting big returns from financial portfolios, whether through stocks, bonds, ETFs, other securities, or a combination of all, is an investor's dream. But for income investors, generating consistent cash flow from each of your liquid investments is your primary focus.

While cash flow can come from bond interest or interest from other types of investments, income investors hone in on 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 account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.

Headquartered in San Dimas, American States Water (AWR Quick QuoteAWR - Free Report) is a Utilities stock that has seen a price change of 2.39% so far this year. The water and electric utility is currently shelling out a dividend of $0.50 per share, with a dividend yield of 2.72%. This compares to the Utility - Water Supply industry's yield of 2.71% and the S&P 500's yield of 1.46%.

Looking at dividend growth, the company's current annualized dividend of $2.02 is up 4.2% from last year. Over the last 5 years, American States Water has increased its dividend 5 times on a year-over-year basis for an average annual increase of 8.23%. 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. American States Water's current payout ratio is 60%, meaning it paid out 60% of its trailing 12-month EPS as dividend.

AWR is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2026 is $3.59 per share, representing a year-over-year earnings growth rate of 6.53%.

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. During periods of rising interest rates, income investors must be mindful that high-yielding stocks tend to struggle. With that in mind, AWR 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).