BankUnited (NYSE:BKU) Will Pay A Dividend Of US$0.23

The board of BankUnited, Inc. (NYSE:BKU) has announced that it will pay a dividend on the 30th of July, with investors receiving US$0.23 per share. This means that the annual payment will be 2.1% of the current stock price, which is in line with the average for the industry.

Check out our latest analysis for BankUnited

BankUnited's Dividend Is Well Covered By Earnings

While it is always good to see a solid dividend yield, we should also consider whether the payment is feasible. Before making this announcement, BankUnited was easily earning enough to cover the dividend. This means that most of what the business earns is being used to help it grow.

Looking forward, earnings per share is forecast to rise by 5.5% over the next year. If the dividend continues on this path, the payout ratio could be 25% by next year, which we think can be pretty sustainable going forward.

BankUnited Has A Solid Track Record

The company has an extended history of paying stable dividends. Since 2011, the first annual payment was US$0.56, compared to the most recent full-year payment of US$0.92. This works out to be a compound annual growth rate (CAGR) of approximately 5.1% a year over that time. Dividends have grown at a reasonable rate over this period, and without any major cuts in the payment over time, we think this is an attractive combination as it provides a nice boost to shareholder returns.

BankUnited Could Grow Its Dividend

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. BankUnited has seen EPS rising for the last five years, at 7.3% per annum. A low payout ratio and decent growth suggests that the company is reinvesting well, and it also has plenty of room to increase the dividend over time.

We Really Like BankUnited's Dividend

Overall, we think that this is a great income investment, and we think that maintaining the dividend this year may have been a conservative choice. The company is easily earning enough to cover its dividend payments and it is great to see that these earnings are being translated into cash flow. All in all, this checks a lot of the boxes we look for when choosing an income stock.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. To that end, BankUnited has 2 warning signs (and 1 which is concerning) we think you should know about. Looking for more high-yielding dividend ideas? Try our curated list of strong dividend payers.

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This article by Simply Wall St is general in nature. 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. Simply Wall St has no position in any stocks mentioned.
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