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.

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.

Hancock Whitney in Focus

Headquartered in Gulfport, Hancock Whitney (HWC) is a Finance stock that has seen a price change of 10.14% so far this year. The holding company of Whitney Bank and Hancock Bank is paying out a dividend of $0.4 per share at the moment, with a dividend yield of 2.65% compared to the Banks - Southeast industry's yield of 2.22% and the S&P 500's yield of 1.52%.

Taking a look at the company's dividend growth, its current annualized dividend of $1.60 is up 6.7% from last year. In the past five-year period, Hancock Whitney has increased its dividend 2 times on a year-over-year basis for an average annual increase of 7.74%. 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. Hancock Whitney's current payout ratio is 30%, meaning it paid out 30% of its trailing 12-month EPS as dividend.

Looking at this fiscal year, HWC expects solid earnings growth. The Zacks Consensus Estimate for 2025 is $5.43 per share, with earnings expected to increase 2.07% 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.

Big, established firms that have more secure profits are often seen as the best dividend options, but it's fairly uncommon to see high-growth businesses or tech start-ups offer their stockholders a dividend. During periods of rising interest rates, income investors must be mindful that high-yielding stocks tend to struggle. That said, they can take comfort from the fact that HWC 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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