Whether it's through stocks, bonds, ETFs, or other types of securities, all investors love seeing their portfolios score big returns. However, 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 account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.

Middlefield Banc Corp. In Focus

Based in Middlefiled, Middlefield Banc Corp. (MBCN) is in the Finance sector, and so far this year, shares have seen a price change of -4.46%. The company is currently shelling out a dividend of $0.21 per share, with a dividend yield of 3.13%. This compares to the Banks - Northeast industry's yield of 2.6% and the S&P 500's yield of 1.56%.

Looking at dividend growth, the company's current annualized dividend of $0.84 is up 5% from last year. Middlefield Banc Corp. has increased its dividend 2 times on a year-over-year basis over the last 5 years for an average annual increase of 8.05%. Future dividend growth will depend on earnings growth as well as payout ratio, which is the proportion of a company's annual earnings per share that it pays out as a dividend. Middlefield Banc's current payout ratio is 42%, meaning it paid out 42% of its trailing 12-month EPS as dividend.

Earnings growth looks solid for MBCN for this fiscal year. The Zacks Consensus Estimate for 2025 is $1.96 per share, with earnings expected to increase 2.08% from the year ago period.

Bottom Line

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 their 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. That said, they can take comfort from the fact that MBCN is not only an attractive dividend play, but also represents a compelling investment opportunity with a Zacks Rank of #1 (Strong Buy).

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This article originally published on Zacks Investment Research (zacks.com).

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