Getting big returns from financial portfolios, whether through stocks, bonds, ETFs, other securities, or a combination of all, is an investor's dream. 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 make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.

First Business Financial Services in Focus

Based in Madison, First Business Financial Services (FBIZ) is in the Finance sector, and so far this year, shares have seen a price change of 13.97%. The bank holding company for First Business Bank and First Business Bank-Milwaukee is paying out a dividend of $0.29 per share at the moment, with a dividend yield of 2.2% compared to the Banks - Midwest industry's yield of 2.9% and the S&P 500's yield of 1.53%.

In terms of dividend growth, the company's current annualized dividend of $1.16 is up 16% from last year. In the past five-year period, First Business Financial Services has increased its dividend 5 times on a year-over-year basis for an average annual increase of 10.80%. Any future dividend growth will depend on both earnings growth and the company's payout ratio; a payout ratio is the proportion of a firm's annual earnings per share that it pays out as a dividend. First Business Financial Services's current payout ratio is 20%. This means it paid out 20% of its trailing 12-month EPS as dividend.

FBIZ is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2025 is $5.43 per share, with earnings expected to increase 10.37% 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.

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

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