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.
Cash flow can come from bond interest, interest from other types of investments, and of course, dividends. A dividend is that coveted distribution of a company's earnings paid out to shareholders, and investors often view it by its dividend yield, a metric that measures the dividend as a percent of the current stock price. Many academic studies show that dividends account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.
BOK Financial in Focus
Headquartered in Tulsa, BOK Financial (BOKF) is a Finance stock that has seen a price change of 3.78% so far this year. The Regional banking operator is currently shelling out a dividend of $0.57 per share, with a dividend yield of 2.06%. This compares to the Banks - Southwest industry's yield of 0.66% and the S&P 500's yield of 1.48%.
In terms of dividend growth, the company's current annualized dividend of $2.28 is up 2.7% from last year. In the past five-year period, BOK Financial has increased its dividend 5 times on a year-over-year basis for an average annual increase of 2.01%. 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. BOK Financial's current payout ratio is 28%. This means it paid out 28% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for BOKF for this fiscal year. The Zacks Consensus Estimate for 2025 is $8.71 per share, with earnings expected to increase 5.70% from the year ago period.
Bottom Line
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.
Big, established firms that have more secure profits are often seen as the best dividend options, but it's fairly uncommon to see high-growth businesses or tech start-ups offer their stockholders a dividend. 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, BOKF presents a compelling investment opportunity; it's not only an attractive dividend play, but the stock also boasts a strong Zacks Rank of #2 (Buy).
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
