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.

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.

SB Financial Group, Inc. In Focus

SB Financial Group, Inc. (SBFG) is headquartered in Defiance, and is in the Finance sector. The stock has seen a price change of 12% since the start of the year. Currently paying a dividend of $0.14 per share, the company has a dividend yield of 2.48%. In comparison, the Banks - Northeast industry's yield is 2.51%, while the S&P 500's yield is 1.53%.

In terms of dividend growth, the company's current annualized dividend of $0.58 is up 3.6% from last year. Over the last 5 years, SB Financial Group, Inc. has increased its dividend 5 times on a year-over-year basis for an average annual increase of 10.39%. 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. SB Financial Group's current payout ratio is 34%, meaning it paid out 34% of its trailing 12-month EPS as dividend.

Looking at this fiscal year, SBFG expects solid earnings growth. The Zacks Consensus Estimate for 2025 is $2 per share, which represents a year-over-year growth rate of 16.96%.

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.

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. With that in mind, SBFG 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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