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.

MetLife in Focus

Based in New York, MetLife (MET) is in the Finance sector, and so far this year, shares have seen a price change of 0.43%. The insurer is paying out a dividend of $0.5 per share at the moment, with a dividend yield of 2.75% compared to the Insurance - Multi line industry's yield of 2.02% and the S&P 500's yield of 1.57%.

Looking at dividend growth, the company's current annualized dividend of $2 is up 1% from last year. MetLife has increased its dividend 5 times on a year-over-year basis over the last 5 years for an average annual increase of 4.54%. 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. Right now, MetLife's payout ratio is 27%, which means it paid out 27% of its trailing 12-month EPS as dividend.

Looking at this fiscal year, MET expects solid earnings growth. The Zacks Consensus Estimate for 2023 is $8.26 per share, representing a year-over-year earnings growth rate of 20.58%.

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. 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, MET 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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