BankUnited, Inc. (BKU) 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 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 8.82%. Currently paying a dividend of $0.33 per share, the company has a dividend yield of 2.72%. In comparison, the Banks - Major Regional industry's yield is 2.78%, while the S&P 500's yield is 1.44%.

Looking at dividend growth, the company's current annualized dividend of $1.32 is up 8.2% 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 34%, meaning it paid out 34% of its trailing 12-month EPS as dividend.

Earnings growth looks solid for BKU for this fiscal year. The Zacks Consensus Estimate for 2026 is $4.16 per share, with earnings expected to increase 16.53% from the year ago period.

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 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 also represents a compelling investment opportunity with a Zacks Rank of #1 (Strong Buy).

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

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