All investors love getting big returns from their portfolio, whether it's through stocks, bonds, ETFs, or other types of securities. 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 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 account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.

Pitney Bowes in Focus

Headquartered in Stamford, Pitney Bowes (PBI) is a Computer and Technology stock that has seen a price change of 28.18% so far this year. The mailing equipment and software company is paying out a dividend of $0.06 per share at the moment, with a dividend yield of 2.59% compared to the Office Automation and Equipment industry's yield of 2.52% and the S&P 500's yield of 1.59%.

Taking a look at the company's dividend growth, its current annualized dividend of $0.24 is up 20% from last year. Pitney Bowes has increased its dividend 1 times on a year-over-year basis over the last 5 years for an average annual increase of 1.05%. 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, Pitney Bowes's payout ratio is 27%, which means it paid out 27% of its trailing 12-month EPS as dividend.

PBI is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2025 is $1.25 per share, representing a year-over-year earnings growth rate of 52.44%.

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. However, not all companies offer 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. Income investors have to be mindful of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. That said, they can take comfort from the fact that PBI is not only an attractive dividend play, but is also a compelling investment opportunity with a Zacks Rank of #2 (Buy).

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Pitney Bowes Inc. (PBI) : Free Stock Analysis Report

This article originally published on Zacks Investment Research (zacks.com).

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