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.

Cash flow can come from bond interest, interest from other types of investments, and of course, 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 account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.

Upbound Group in Focus

Upbound Group (UPBD) is headquartered in Plano, and is in the Finance sector. The stock has seen a price change of -5.25% since the start of the year. The company that leases furniture and appliances with an option to buy is paying out a dividend of $0.39 per share at the moment, with a dividend yield of 5.64% compared to the Financial - Leasing Companies industry's yield of 3.44% and the S&P 500's yield of 1.52%.

Taking a look at the company's dividend growth, its current annualized dividend of $1.56 is up 4% from last year. In the past five-year period, Upbound Group has increased its dividend 4 times on a year-over-year basis for an average annual increase of 5.93%. 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. Upbound Group's current payout ratio is 41%, meaning it paid out 41% of its trailing 12-month EPS as dividend.

Looking at this fiscal year, UPBD expects solid earnings growth. The Zacks Consensus Estimate for 2025 is $4.41 per share, with earnings expected to increase 15.14% from the year ago period.

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. Income investors have to be mindful of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. With that in mind, UPBD is a compelling investment opportunity. Not only is it a strong dividend play, but the stock currently sits at a Zacks Rank of 3 (Hold).

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Upbound Group, Inc. (UPBD) : Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research