Getting big returns from financial portfolios, whether through stocks, bonds, ETFs, other securities, or a combination of all, is an investor's dream. However, when you're an income investor, your primary focus is generating consistent cash flow from each of your liquid investments.
Cash flow can come from bond interest, interest from other types of investments, and, of course, 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.
Based in Charleston, United Bankshares (UBSI) is in the Finance sector, and so far this year, shares have seen a price change of 24.84%. The holding company for United Bank is paying out a dividend of $0.38 per share at the moment, with a dividend yield of 3.17% compared to the Banks - Southeast industry's yield of 1.89% and the S&P 500's yield of 1.32%.
Looking at dividend growth, the company's current annualized dividend of $1.52 is up 2% from last year. Over the last 5 years, United Bankshares has increased its dividend 2 times on a year-over-year basis for an average annual increase of 1.39%. Looking ahead, future dividend growth will be dependent on earnings growth and payout ratio, which is the proportion of a company's annual earnings per share that it pays out as a dividend. United Bankshares's current payout ratio is 41%, meaning it paid out 41% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, UBSI expects solid earnings growth. The Zacks Consensus Estimate for 2026 is $3.66 per share, with earnings expected to increase 11.93% from the year ago period.
Investors like dividends for many reasons; they greatly improve stock investing profits, decrease overall portfolio risk, and carry tax advantages, among others. But, not every company offers a quarterly payout.
For instance, it's a rare occurrence when a tech start-up or big growth business offers its 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, UBSI 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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