All investors love getting big returns from their portfolio, whether it's through stocks, bonds, ETFs, or other types of securities. But 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 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.

Lakeland Financial in Focus

Based in Warsaw, Lakeland Financial (LKFN) is in the Finance sector, and so far this year, shares have seen a price change of 0.67%. The holding company for Lake City Bank is currently shelling out a dividend of $0.5 per share, with a dividend yield of 2.89%. This compares to the Banks - Midwest industry's yield of 2.8% and the S&P 500's yield of 1.49%.

In terms of dividend growth, the company's current annualized dividend of $2 is up 4.2% from last year. In the past five-year period, Lakeland Financial has increased its dividend 4 times on a year-over-year basis for an average annual increase of 12.70%. 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. Lakeland Financial's current payout ratio is 55%. This means it paid out 55% of its trailing 12-month EPS as dividend.

Earnings growth looks solid for LKFN for this fiscal year. The Zacks Consensus Estimate for 2025 is $3.61 per share, which represents a year-over-year growth rate of 4.03%.

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.

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

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