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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 that coveted distribution of a company's earnings paid out to shareholders, and investors often view it by its dividend yield, a metric that measures the 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.

BlackRock in Focus

BlackRock (BLK) is headquartered in New York, and is in the Finance sector. The stock has seen a price change of -3.57% since the start of the year. The investment firm is paying out a dividend of $5.1 per share at the moment, with a dividend yield of 2.61% compared to the Financial - Investment Management industry's yield of 3.09% and the S&P 500's yield of 1.59%.

In terms of dividend growth, the company's current annualized dividend of $20.40 is up 2% from last year. BlackRock has increased its dividend 5 times on a year-over-year basis over the last 5 years for an average annual increase of 11.21%. Future dividend growth will depend on earnings growth as well as payout ratio, which is the proportion of a company's annual earnings per share that it pays out as a dividend. Right now, BlackRock's payout ratio is 51%, which means it paid out 51% of its trailing 12-month EPS as dividend.

BLK is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2024 is $41.25 per share, representing a year-over-year earnings growth rate of 9.21%.

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. It's important to keep in mind that not all companies provide a quarterly payout.

High-growth firms or tech start-ups, for example, rarely provide their shareholders a dividend, while larger, more established companies that have more secure profits are often seen as the best dividend options. 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, BLK 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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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.