All investors love getting big returns from their portfolio, whether it's through stocks, bonds, ETFs, or other types of securities. But for income investors, generating consistent cash flow from each of your liquid investments is your primary focus.

Cash flow can come from bond interest, interest from other types of investments, and of course, 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.

Barclays in Focus

Based in London, Barclays (BCS) is in the Finance sector, and so far this year, shares have seen a price change of 20.84%. The financial holding company is currently shelling out a dividend of $0.27 per share, with a dividend yield of 3.32%. This compares to the Banks - Foreign industry's yield of 3.72% and the S&P 500's yield of 1.57%.

In terms of dividend growth, the company's current annualized dividend of $0.53 is up 29.3% from last year. Over the last 5 years, Barclays has increased its dividend 3 times on a year-over-year basis 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, which represents a year-over-year growth rate of 9.78%.

Bottom Line

From greatly improving stock investing profits and reducing overall portfolio risk to providing tax advantages, investors like dividends for a variety of different reasons. 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. Income investors must be conscious 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 #2 (Buy).

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

Barclays PLC (BCS) : Free Stock Analysis Report

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

Zacks Investment Research