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

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.

Associated Banc-Corp in Focus

Headquartered in Green Bay, Associated Banc-Corp (ASB) is a Finance stock that has seen a price change of -6.23% so far this year. The bank holding company is currently shelling out a dividend of $0.23 per share, with a dividend yield of 4.11%. This compares to the Banks - Midwest industry's yield of 3.28% and the S&P 500's yield of 1.64%.

In terms of dividend growth, the company's current annualized dividend of $0.92 is up 3.4% from last year. In the past five-year period, Associated Banc-Corp has increased its dividend 4 times on a year-over-year basis for an average annual increase of 5.65%. 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. Associated Banc-Corp's current payout ratio is 41%, meaning it paid out 41% of its trailing 12-month EPS as dividend.

Earnings growth looks solid for ASB for this fiscal year. The Zacks Consensus Estimate for 2025 is $2.44 per share, which represents a year-over-year growth rate of 2.52%.

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. However, not all companies offer 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. With that in mind, ASB 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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Associated Banc-Corp (ASB) : Free Stock Analysis Report

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

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