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

Mid-America Apartment Communities in Focus

Based in Germantown, Mid-America Apartment Communities (MAA Quick QuoteMAA - Free Report) is in the Finance sector, and so far this year, shares have seen a price change of -19.86%. The real estate investment trust is paying out a dividend of $1.25 per share at the moment, with a dividend yield of 2.72% compared to the REIT and Equity Trust - Residential industry's yield of 2.88% and the S&P 500's yield of 1.58%.

In terms of dividend growth, the company's current annualized dividend of $5 is up 22% from last year. Over the last 5 years, Mid-America Apartment Communities has increased its dividend 5 times on a year-over-year basis for an average annual increase of 4.22%. 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. Mid-America Apartment Communities's current payout ratio is 57%, meaning it paid out 57% of its trailing 12-month EPS as dividend.

MAA is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2022 is $8.28 per share, representing a year-over-year earnings growth rate of 18.12%.

Bottom Line

Investors like dividends for many reasons; they greatly improve stock investing profits, decrease overall portfolio risk, and carry tax advantages, among others. But, not every company offers 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. With that in mind, MAA 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).