Getting big returns from financial portfolios, whether through stocks, bonds, ETFs, other securities, or a combination of all, is an investor's dream. 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 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.
Atlantic Union in Focus
Headquartered in Glen Allen, Atlantic Union (AUB) is a Finance stock that has seen a price change of -16.37% so far this year. The holding company for Atlantic Union Bank is currently shelling out a dividend of $0.34 per share, with a dividend yield of 4.29%. This compares to the Banks - Northeast industry's yield of 2.76% and the S&P 500's yield of 1.57%.
In terms of dividend growth, the company's current annualized dividend of $1.36 is up 4.6% from last year. Over the last 5 years, Atlantic Union has increased its dividend 4 times on a year-over-year basis for an average annual increase of 6.64%. 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. Atlantic Union's current payout ratio is 49%. This means it paid out 49% of its trailing 12-month EPS as dividend.
AUB is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2025 is $3.22 per share, representing a year-over-year earnings growth rate of 17.52%.
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. It's important to keep in mind that not all companies provide a quarterly payout.
Big, established firms that have more secure profits are often seen as the best dividend options, but it's fairly uncommon to see high-growth businesses or tech start-ups offer their stockholders a dividend. 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, AUB presents a compelling investment opportunity; it's not only an attractive dividend play, but the stock also boasts a strong Zacks Rank of #2 (Buy).
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Atlantic Union Bankshares Corporation (AUB): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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