Getting big returns from financial portfolios, whether through stocks, bonds, ETFs, other securities, or a combination of all, is an investor's dream. But for income investors, generating consistent cash flow from each of your liquid investments is your primary focus.

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 account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.

Lakeland Financial in Focus

Based in Warsaw, Lakeland Financial (LKFN) is in the Finance sector, and so far this year, shares have seen a price change of -22.89%. The holding company for Lake City Bank is paying out a dividend of $0.5 per share at the moment, with a dividend yield of 3.77% compared to the Banks - Midwest industry's yield of 3.6% and the S&P 500's yield of 1.69%.

Looking at dividend growth, the company's current annualized dividend of $2 is up 4.2% from last year. Lakeland Financial has increased its dividend 5 times on a year-over-year basis over the last 5 years for an average annual increase of 12.44%. 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, Lakeland Financial's payout ratio is 55%, which means it paid out 55% of its trailing 12-month EPS as dividend.

Looking at this fiscal year, LKFN expects solid earnings growth. The Zacks Consensus Estimate for 2025 is $3.70 per share, which represents a year-over-year growth rate of 6.63%.

Bottom Line

Investors like dividends for many reasons; they greatly improve stock investing profits, decrease overall portfolio risk, and carry tax advantages, among others. But, not every company offers 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, LKFN 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

Lakeland Financial Corporation (LKFN) : Free Stock Analysis Report

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

Zacks Investment Research