Here's What We Like About BankUnited's (NYSE:BKU) Upcoming Dividend

BankUnited, Inc. (NYSE:BKU) stock is about to trade ex-dividend in 4 days. This means that investors who purchase shares on or after the 13th of January will not receive the dividend, which will be paid on the 29th of January.

BankUnited'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 payments show that BankUnited has a trailing yield of 2.3% on the current share price of $39.53. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. So we need to investigate whether BankUnited can afford its dividend, and if the dividend could grow.

See our latest analysis for BankUnited

Dividends are typically paid from company earnings. If a company pays more in dividends than it earned in profit, then the dividend could be unsustainable. BankUnited paid out a comfortable 43% of its profit last year.

Companies that pay out less in dividends than they earn in profits generally have more sustainable dividends. The lower the payout ratio, the more wiggle room the business has before it could be forced to cut the dividend.

Click here to see the company's payout ratio, plus analyst estimates of its future dividends.

Have Earnings And Dividends Been Growing?

Companies that aren't growing their earnings can still be valuable, but it is even more important to assess the sustainability of the dividend if it looks like the company will struggle to grow. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. With that in mind, we're not enthused to see that BankUnited's earnings per share have remained effectively flat over the past five years. We'd take that over an earnings decline any day, but in the long run, the best dividend stocks all grow their earnings per share.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. In the last 10 years, BankUnited has lifted its dividend by approximately 5.1% a year on average.

To Sum It Up

Should investors buy BankUnited for the upcoming dividend? Earnings per share have been flat in recent years, although BankUnited reinvests more than half its earnings in the business, which could suggest there are some growth projects that have not yet reached fruition. We think this is a pretty attractive combination, and would be interested in investigating BankUnited more closely.

So while BankUnited looks good from a dividend perspective, it's always worthwhile being up to date with the risks involved in this stock. For example, we've found 1 warning sign for BankUnited that we recommend you consider before investing in the business.

We wouldn't recommend just buying the first dividend stock you see, though. Here's a list of interesting dividend stocks with a greater than 2% yield and an upcoming dividend.

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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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