There is a lot to be liked about BOK Financial Corporation (NASDAQ:BOKF) as an income stock. It has paid dividends over the past 10 years. The stock currently pays out a dividend yield of 2.8%, and has a market cap of US$5.2b. Should it have a place in your portfolio? Let’s take a look at BOK Financial in more detail.
5 questions I ask before picking a dividend stock
When assessing a stock as a potential addition to my dividend Portfolio, I look at these five areas:
- Is it the top 25% annual dividend yield payer?
- Has its dividend been stable over the past (i.e. no missed payments or significant payout cuts)?
- Has it increased its dividend per share amount over the past?
- Can it afford to pay the current rate of dividends from its earnings?
- Will the company be able to keep paying dividend based on the future earnings growth?
How well does BOK Financial fit our criteria?
The current trailing twelve-month payout ratio for the stock is 30%, meaning the dividend is sufficiently covered by earnings. In the near future, analysts are predicting a payout ratio of 29% which, assuming the share price stays the same, leads to a dividend yield of 2.9%. In addition to this, EPS should increase to $7.07.
If you want to dive deeper into the sustainability of a certain payout ratio, you may wish to consider the cash flow of the business. A business with strong cash flow can sustain a higher divided payout ratio than a company with weak cash flow.
If there is one thing that you want to be reliable in your life, it’s dividend stocks and their constant income stream. In the case of BOKF it has increased its DPS from $0.90 to $2 in the past 10 years. It has also been paying out dividend consistently during this time, as you’d expect for a company increasing its dividend levels. These are all positive signs of a great, reliable dividend stock.
Relative to peers, BOK Financial produces a yield of 2.8%, which is on the low-side for Banks stocks.
Taking into account the dividend metrics, BOK Financial ticks most of the boxes as a strong dividend investment, putting it in my list of top dividend payers. 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. I’ve put together three relevant aspects you should further examine:
- Future Outlook: What are well-informed industry analysts predicting for BOKF’s future growth? Take a look at our free research report of analyst consensus for BOKF’s outlook.
- Valuation: What is BOKF 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 BOKF is currently mispriced by the market.
- Other Dividend Rockstars: Are there better dividend payers with stronger fundamentals out there? Check out our free list of these great stocks here.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at firstname.lastname@example.org.