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.

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 make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.

First Savings Financial in Focus

Based in Jeffersonville, First Savings Financial (FSFG) is in the Finance sector, and so far this year, shares have seen a price change of -6.29%. The bank holding company is paying out a dividend of $0.15 per share at the moment, with a dividend yield of 2.41% compared to the Financial - Savings and Loan industry's yield of 2.68% and the S&P 500's yield of 1.59%.

Taking a look at the company's dividend growth, its current annualized dividend of $0.60 is up 1.7% from last year. In the past five-year period, First Savings Financial has increased its dividend 5 times on a year-over-year basis for an average annual increase of 25.25%. 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, First Savings Financial's payout ratio is 28%, which means it paid out 28% of its trailing 12-month EPS as dividend.

Looking at this fiscal year, FSFG expects solid earnings growth. The Zacks Consensus Estimate for 2025 is $2.65 per share, representing a year-over-year earnings growth rate of 55.88%.

Bottom Line

Investors like dividends for a variety of different reasons, from tax advantages and decreasing overall portfolio risk to considerably improving stock investing profits. However, not all companies offer 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. With that in mind, FSFG 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).

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First Savings Financial Group, Inc. (FSFG) : Free Stock Analysis Report

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