All investors love getting big returns from their portfolio, whether it's through stocks, bonds, ETFs, or other types of securities. But when you're an income investor, your primary focus is generating consistent cash flow from each of your liquid investments.

While cash flow can come from bond interest or interest from other types of investments, income investors hone in on dividends. A dividend is the distribution of a company's earnings paid out to shareholders; it's often viewed by its dividend yield, a metric that measures a dividend as a percent of the current stock price. Many academic studies show that dividends make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.

BankUnited, Inc. In Focus

Based in Miami Lakes, BankUnited, Inc. (BKU) is in the Finance sector, and so far this year, shares have seen a price change of 7.55%. The company is paying out a dividend of $0.29 per share at the moment, with a dividend yield of 3.33% compared to the Banks - Major Regional industry's yield of 3.26% and the S&P 500's yield of 1.51%.

Taking a look at the company's dividend growth, its current annualized dividend of $1.16 is up 9.4% from last year. Over the last 5 years, BankUnited, Inc. has increased its dividend 4 times on a year-over-year basis for an average annual increase of 6.21%. Future dividend growth will depend on earnings growth as well as payout ratio, which is the proportion of a company's annual earnings per share that it pays out as a dividend. Right now, BankUnited's payout ratio is 43%, which means it paid out 43% of its trailing 12-month EPS as dividend.

BKU is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2024 is $2.87 per share, with earnings expected to increase 1.41% from the year ago period.

Bottom Line

Investors like dividends for many reasons; they greatly improve stock investing profits, decrease overall portfolio risk, and carry tax advantages, among others. It's important to keep in mind that not all companies provide a quarterly payout.

For instance, it's a rare occurrence when a tech start-up or big growth business offers their shareholders a dividend. It's more common to see larger companies with more established profits give out dividends. Income investors must be conscious of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. With that in mind, BKU is a compelling investment opportunity. Not only is it a strong dividend play, but the stock currently sits at a Zacks Rank of 3 (Hold).

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