Should You Buy Union Bankshares Corporation (NASDAQ:UBSH) For Its Dividend?

Dividends play a key role in compounding returns over time and can form a large part of our portfolio return. Over the past 10 years, Union Bankshares Corporation (NASDAQ:UBSH) has returned an average of 3.00% per year to shareholders in terms of dividend yield. Should it have a place in your portfolio? Let's take a look at Union Bankshares in more detail. See our latest analysis for Union Bankshares

5 questions to ask before buying a dividend stock

Whenever I am looking at a potential dividend stock investment, I always check these five metrics:

• Does it pay an annual yield higher than 75% of dividend payers?
• Does it consistently pay out dividends without missing a payment of significantly cutting payout?
• Has dividend per share risen in the past couple of years?
• Can it afford to pay the current rate of dividends from its earnings?
• Will it be able to continue to payout at the current rate in the future?

How well does Union Bankshares fit our criteria?

The current trailing twelve-month payout ratio for the stock is 48.54%, meaning the dividend is sufficiently covered by earnings. In the near future, analysts are predicting lower payout ratio of 31.53%, leading to a dividend yield of around 2.28%. However, EPS should increase to $2.32, meaning that the lower payout ratio does not necessarily implicate a lower dividend payment. If there's one type of stock you want to be reliable, it's dividend stocks and their stable income-generating ability. Whilst its per-share payments have increased during the past 10 years, there has been some hiccups. Shareholders would have seen a few years of reduced payments in this time. Relative to peers, Union Bankshares generates a yield of 2.16%, which is on the low-side for Banks stocks.

Next Steps:

With these dividend metrics in mind, I definitely rank Union Bankshares as a strong income stock, and is worth further research for anyone who considers dividends an important part of their portfolio strategy. Given that this is purely a dividend analysis, you should always research extensively before deciding whether or not a stock is an appropriate investment for you. I always recommend analysing the company's fundamentals and underlying business before making an investment decision. Below, I've compiled three pertinent aspects you should further examine:

1. Future Outlook: What are well-informed industry analysts predicting for UBSH’s future growth? Take a look at our free research report of analyst consensus for UBSH’s outlook.
2. Valuation: What is UBSH worth today? Even if the stock is a cash cow, it's not worth an infinite price. The intrinsic value infographic in our free research report helps visualize whether UBSH is currently mispriced by the market.
3. Other Dividend Rockstars: Are there better dividend payers with stronger fundamentals out there? Check out our free list of these great stocks here.

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Simply Wall St analyst Simply Wall St and Simply Wall St have no position in any of the companies mentioned. This article is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.