Getting big returns from financial portfolios, whether through stocks, bonds, ETFs, other securities, or a combination of all, is an investor's dream. 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.
Based in Tulsa, BOK Financial (BOKF) is in the Finance sector, and so far this year, shares have seen a price change of 2.36%. The Regional banking operator is paying out a dividend of $0.57 per share at the moment, with a dividend yield of 2.09% compared to the Banks - Southwest industry's yield of 0.65% and the S&P 500's yield of 1.56%.
Taking a look at the company's dividend growth, its current annualized dividend of $2.28 is up 2.7% from last year. BOK Financial has increased its dividend 5 times on a year-over-year basis over the last 5 years for an average annual increase of 2.01%. Any future dividend growth will depend on both earnings growth and the company's payout ratio; a payout ratio is the proportion of a firm's annual earnings per share that it pays out as a dividend. BOK Financial's current payout ratio is 28%, meaning it paid out 28% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, BOKF expects solid earnings growth. The Zacks Consensus Estimate for 2025 is $8.83 per share, with earnings expected to increase 7.16% from the year ago period.
Investors like dividends for a variety of different reasons, from tax advantages and decreasing overall portfolio risk to considerably improving stock investing profits. However, not all companies offer 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 have to be mindful of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. That said, they can take comfort from the fact that BOKF is not only an attractive dividend play, but is also a compelling investment opportunity with a Zacks Rank of #1 (Strong Buy).
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This article originally published on Zacks Investment Research (zacks.com).
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