All investors love getting big returns from their portfolio, whether it's through stocks, bonds, ETFs, or other types of securities. 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.

Barclays in Focus

Barclays (BCS) is headquartered in London, and is in the Finance sector. The stock has seen a price change of 19.19% since the start of the year. The financial holding company is currently shelling out a dividend of $0.27 per share, with a dividend yield of 3.37%. This compares to the Banks - Foreign industry's yield of 3.74% and the S&P 500's yield of 1.56%.

Taking a look at the company's dividend growth, its current annualized dividend of $0.53 is up 29.3% from last year. Barclays has increased its dividend 3 times on a year-over-year basis over the last 5 years for an average annual increase of 45.32%. 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. Barclays's current payout ratio is 16%, meaning it paid out 16% of its trailing 12-month EPS as dividend.

Earnings growth looks solid for BCS for this fiscal year. The Zacks Consensus Estimate for 2025 is $2.02 per share, with earnings expected to increase 9.78% 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.

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. Income investors have to be mindful of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. That said, they can take comfort from the fact that BCS 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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Barclays PLC (BCS) : Free Stock Analysis Report

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

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