Whether it's through stocks, bonds, ETFs, or other types of securities, all investors love seeing their portfolios score big returns. 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 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.
Based in Miami Lakes, BankUnited, Inc. (BKU) is in the Finance sector, and so far this year, shares have seen a price change of 4.78%. The company is currently shelling out a dividend of $0.31 per share, with a dividend yield of 2.66%. This compares to the Banks - Major Regional industry's yield of 2.63% and the S&P 500's yield of 1.36%.
Looking at dividend growth, the company's current annualized dividend of $1.24 is up 1.6% from last year. Over the last 5 years, BankUnited, Inc. has increased its dividend 4 times on a year-over-year basis for an average annual increase of 6.79%. 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. BankUnited's current payout ratio is 35%, meaning it paid out 35% of its trailing 12-month EPS as dividend.
BKU is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2026 is $4.01 per share, which represents a year-over-year growth rate of 12.32%.
Investors like dividends for many reasons; they greatly improve stock investing profits, decrease overall portfolio risk, and carry tax advantages, among others. 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 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 BKU is not only an attractive dividend play, but is also a compelling investment opportunity with a Zacks Rank of #1 (Strong Buy).
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BankUnited, Inc. (BKU): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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