Whether it's through stocks,of mice and men quotes from crooks bonds, ETFs, or other types of securities, all investors love seeing their portfolios score big returns. 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 make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.

Prosperity Bancshares in Focus

Based in Houston, Prosperity Bancshares (PB) is in the Finance sector, and so far this year, shares have seen a price change of -8.53%. The financial holding company is paying out a dividend of $0.46 per share at the moment, with a dividend yield of 2.8% compared to the Banks - Southwest industry's yield of 1.47% and the S&P 500's yield of 2.04%.

Looking at dividend growth, the company's current annualized dividend of $1.84 is up 8.9% from last year. In the past five-year period, Prosperity Bancshares has increased its dividend 5 times on a year-over-year basis for an average annual increase of 10.73%. Looking ahead, future dividend growth will be dependent on earnings growth and payout ratio, which is the proportion of a company's annual earnings per share that it pays out as a dividend. Prosperity Bancshares's current payout ratio is 37%, meaning it paid out 37% of its trailing 12-month EPS as dividend.

PB is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2020 is $5.46 per share, representing a year-over-year earnings growth rate of 8.76%.

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.

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. During periods of rising interest rates, income investors must be mindful that high-yielding stocks tend to struggle. That said, they can take comfort from the fact that PB is not only an attractive dividend play, but is also 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

Prosperity Bancshares, Inc. (PB) : Free Stock Analysis Report

To read this article on Zacks.com click here.

View comments

• ·Americans See Record Fall in Consumer Spending, Savings Soar
• ·Netflix Is Said to Nab Activision CFO in New Year’s Eve Switch
• ·A Note On Black Knight, Inc.’s (NYSE:BKI) ROE and Debt To Equity
• ·33 Flouncy Frothy Fabulous Miss Universe Pageant Gowns
• ·Were Hedge Funds Right About Automatic Data Processing (ADP)?
• ·Illinois Tool Works: 4Q Earnings Snapshot
• ·Effort to Close Double Jeopardy 'Loophole' in NY Revived in New Session
• ·Meghan Trainor’s TMI Comments on Daryl Sabara Marriage: From ‘Gross’ Toilet Moments to ‘Painful’ Sex
• ·As coronavirus misinformation spreads on social media, Facebook removes posts
• ·Government Shutdown Means You May Not See Any New Beers or Wines for a While
• ·5G is coming in 2019, and it's going to change your life
• ·Weekly Outlook: December 3 - 7
• ·Is G5 Entertainment AB (publ)'s (STO:G5EN) Latest Stock Performance A Reflection Of Its Financial Health?
• ·Amazon.com Rises 3%
• ·Should You Be Holding TrueCar Inc (TRUE) Right Now?
• ·How Much Are Surmodics, Inc. (NASDAQ:SRDX) Insiders Taking Off The Table?