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.

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.

ACNB in Focus

ACNB (ACNB) is headquartered in Gettysburg, and is in the Finance sector. The stock has seen a price change of 0.68% since the start of the year. Currently paying a dividend of $0.32 per share, the company has a dividend yield of 3.19%. In comparison, the Banks - Southwest industry's yield is 1.16%, while the S&P 500's yield is 1.66%.

Looking at dividend growth, the company's current annualized dividend of $1.28 is up 1.6% from last year. ACNB has increased its dividend 4 times on a year-over-year basis over the last 5 years for an average annual increase of 6.40%. 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. ACNB's current payout ratio is 34%, meaning it paid out 34% of its trailing 12-month EPS as dividend.

Looking at this fiscal year, ACNB expects solid earnings growth. The Zacks Consensus Estimate for 2025 is $4.30 per share, which represents a year-over-year growth rate of 15.28%.

Bottom Line

Investors like dividends for many reasons; they greatly improve stock investing profits, decrease overall portfolio risk, and carry tax advantages, among others. 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 their 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, ACNB presents a compelling investment opportunity; it's not only an attractive dividend play, but the stock also boasts a strong Zacks Rank of #1 (Strong Buy).

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

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