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

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 account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.

First Bancorp in Focus

First Bancorp (FBP Quick QuoteFBP - Free Report) is headquartered in San Juan, and is in the Finance sector. The stock has seen a price change of -6.24% since the start of the year. Currently paying a dividend of $0.18 per share, the company has a dividend yield of 4.13%. In comparison, the Banks - Southeast industry's yield is 2.33%, while the S&P 500's yield is 1.62%.

Looking at dividend growth, the company's current annualized dividend of $0.72 is up 12.5% from last year. In the past five-year period, First Bancorp has increased its dividend 4 times on a year-over-year basis for an average annual increase of 33.23%. 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. Right now, First Bancorp's payout ratio is 35%, which means it paid out 35% of its trailing 12-month EPS as dividend.

Looking at this fiscal year, FBP expects solid earnings growth. The Zacks Consensus Estimate for 2025 is $1.85 per share, with earnings expected to increase 2.21% from the year ago period.

Bottom Line

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.

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 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 FBP is not only an attractive dividend play, but also represents a compelling investment opportunity with a Zacks Rank of #2 (Buy).