Bank United, Inc. The stock (NYSE: BKU) is about to trade ex-dividend in 4 days. The ex-dividend date occurs one day before the record date, which is the day on which shareholders must be on the books of the company to receive a dividend. The ex-dividend date is important because the settlement process involves two full business days. So if you miss this date, you will not appear on the books of the company on the date of registration. As a result, BankUnited investors who buy the shares on or after October 13 will not receive the dividend, which will be paid on October 29.
The company’s next dividend payment will be US $ 0.23 per share. Last year, in total, the company distributed US $ 0.92 to shareholders. Last year’s total dividend payouts show BankUnited has a rolling 2.2% return on the current share price of $ 42.5. Dividends are a major contributor to returns on investment for long-term holders, but only if the dividend continues to be paid. That is why we should always check whether dividend payments seem sustainable and whether the business is growing.
See our latest analysis for BankUnited
Dividends are usually paid out of the company’s profits, so if a company pays more than it earned, its dividend is usually at risk of being reduced. BankUnited has a low and conservative payout ratio of just 24% of its after-tax income.
When a company has paid less dividends than it made a profit, it usually suggests that its dividend is affordable. The lower the% of its profit that it pays out, the greater the margin of safety for the dividend if the company goes into recession.
Click here to view the company’s payout ratio, as well as analysts’ estimates of its future dividends.
Have profits and dividends increased?
Stocks of companies that generate sustainable earnings growth often offer the best dividend prospects because it’s easier to raise the dividend when earnings rise. If profits fall enough, the company could be forced to cut its dividend. That’s why it’s a relief to see BankUnited’s earnings per share increase 9.4% per year over the past five years.
Most investors primarily assess a company’s dividend prospects by checking the historical rate of dividend growth. BankUnited has generated an average annual increase of 5.1% per annum in its dividend, based on dividend payments over the past 10 years. We are happy to see dividends increasing alongside earnings over multiple years, which may be a sign that the company intends to share the growth with its shareholders.
The bottom line
Does BankUnited have what it takes to maintain its dividend payments? It has increased its earnings per share somewhat in recent years, although it is reinvesting more than half of its earnings in the company, which could suggest that some growth plans have yet to materialize. BankUnited ticks a lot of boxes for us from a dividend perspective, and we believe these characteristics should mark the company as deserving more attention.
In light of this, while BankUnited has an attractive dividend, it is worth knowing the risks involved in this stock. Every business has risks, and we have spotted 1 warning sign for BankUnited you should know.
If you are in the dividend-paying stock market, we recommend that you check out our list of the highest dividend-paying stocks with a yield above 2% and a future dividend.
This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts using only unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell shares and does not take into account your goals or your financial situation. Our aim is to bring you long-term, targeted analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price sensitive companies or qualitative documents. Simply Wall St has no position in any of the stocks mentioned.
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