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 make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.

Stifel Financial in Focus

Based in St. Louis, Stifel Financial (SF) is in the Finance sector, and so far this year, shares have seen a price change of -13.63%. Currently paying a dividend of $0.46 per share, the company has a dividend yield of 2.01%. In comparison, the Financial - Investment Bank industry's yield is 1.02%, while the S&P 500's yield is 1.58%.

Taking a look at the company's dividend growth, its current annualized dividend of $1.84 is up 9.5% from last year. Stifel Financial has increased its dividend 5 times on a year-over-year basis over the last 5 years for an average annual increase of 39.99%. 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. Stifel's current payout ratio is 25%, meaning it paid out 25% of its trailing 12-month EPS as dividend.

Looking at this fiscal year, SF expects solid earnings growth. The Zacks Consensus Estimate for 2025 is $8.26 per share, with earnings expected to increase 21.29% 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. 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 SF is not only an attractive dividend play, but is also a compelling investment opportunity with a Zacks Rank of #1 (Strong Buy).

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Stifel Financial Corporation (SF) : Free Stock Analysis Report

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

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