First Financial Corp. (THFF) Could Be a Great Choice

Getting big returns from financial portfolios, whether through stocks, bonds, ETFs, other securities, or a combination of all, is an investor's dream. However, 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.

First Financial Corp. (THFF) is headquartered in Terre Haute, and is in the Finance sector. The stock has seen a price change of 37.02% since the start of the year. Currently paying a dividend of $0.56 per share, the company has a dividend yield of 2.71%. In comparison, the Banks - Midwest industry's yield is 2.41%, while the S&P 500's yield is 1.32%.

Looking at dividend growth, the company's current annualized dividend of $2.24 is up 9.8% from last year. Over the last 5 years, First Financial Corp. has increased its dividend 4 times on a year-over-year basis for an average annual increase of 17.41%. 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. First Financial Corp.'s current payout ratio is 31%, meaning it paid out 31% of its trailing 12-month EPS as dividend.

Looking at this fiscal year, THFF expects solid earnings growth. The Zacks Consensus Estimate for 2026 is $7.46 per share, which represents a year-over-year growth rate of 11.68%.

Investors like dividends for many reasons; they greatly improve stock investing profits, decrease overall portfolio risk, and carry tax advantages, among others. However, not all companies offer a quarterly payout.

High-growth firms or tech start-ups, for example, rarely provide their shareholders a dividend, while larger, more established companies that have more secure profits are often seen as the best dividend options. Income investors must be conscious of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. With that in mind, THFF 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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This article originally published on Zacks Investment Research (zacks.com).

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