Whether it's through stocks, bonds, ETFs, or other types of securities, all investors love seeing their portfolios score big returns. But when you're an income investor, your primary focus is generating consistent cash flow from each of your liquid investments.

While cash flow can come from bond interest or interest from other types of investments, income investors hone in on 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.

Virtus Investment Partners in Focus

Virtus Investment Partners (VRTS Quick QuoteVRTS - Free Report) is headquartered in Hartford, and is in the Finance sector. The stock has seen a price change of -31.55% since the start of the year. The asset management company is paying out a dividend of $2.25 per share at the moment, with a dividend yield of 5.96% compared to the Financial - Investment Management industry's yield of 3.36% and the S&P 500's yield of 1.76%.

Taking a look at the company's dividend growth, its current annualized dividend of $9 is up 13.2% from last year. In the past five-year period, Virtus Investment Partners has increased its dividend 5 times on a year-over-year basis for an average annual increase of 29.31%. 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. Virtus's current payout ratio is 34%. This means it paid out 34% of its trailing 12-month EPS as dividend.

VRTS is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2025 is $27.87 per share, with earnings expected to increase 5.85% from the year ago period.

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. 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 VRTS is not only an attractive dividend play, but is also a compelling investment opportunity with a Zacks Rank of #2 (Buy).