Whether it's through stocks, bonds, ETFs, or other types of securities, all investors love seeing their portfolios score big returns. 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.

SB Financial Group, Inc. In Focus

Based in Defiance, SB Financial Group, Inc. (SBFG) is in the Finance sector, and so far this year, shares have seen a price change of -0.62%. The company is paying out a dividend of $0.14 per share at the moment, with a dividend yield of 2.79% compared to the Banks - Northeast industry's yield of 2.89% and the S&P 500's yield of 1.58%.

Taking a look at the company's dividend growth, its current annualized dividend of $0.58 is up 3.6% from last year. In the past five-year period, SB Financial Group, Inc. has increased its dividend 5 times on a year-over-year basis for an average annual increase of 10.39%. 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. Right now, SB Financial Group's payout ratio is 34%, which means it paid out 34% of its trailing 12-month EPS as dividend.

Earnings growth looks solid for SBFG for this fiscal year. 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.

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. 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 SBFG 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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SB Financial Group, Inc. (SBFG) : Free Stock Analysis Report

This article originally published on Zacks Investment Research (zacks.com).

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