) jumped on the bandwagon of rewarding shareholders via enhanced
capital deployment activities. The company announced an
enhancement of nearly 23.5% in its quarterly dividend.
The Board of Directors of BankUnited declared a cash dividend of
21 cents per share, up from 17 cents paid last time.
Concurrently, the company announced a preferred stock dividend of
21 cents. This also marks an increase of about 23.5% from the
prior preferred dividend. Both the dividends will be paid on
December 27 to stockholders of record as on December 13.
This hike is the second one since BankUnited started paying
dividends in 2011. Earlier in February 2012, the company raised
its dividend from 14 cents per share to 17 cents.
The announcement of the dividend raise comes on the back of
BankUnited's strong capital position. As of September 30, 2012,
the company's tier 1 leverage ratio was 12.9% while tier 1
risk-based capital ratio was 34.3%. Further, cash and cash
equivalents exiting the third quarter totaled $346.6 million.
These sturdy financials well support the company's decision to
boost its dividend.
In the last one month, many companies in the financial sector
have announced improved capital deployment plans. Notable among
Waddell & Reed Financial Inc.
Franklin Resources Inc.
City National Corp.
Commerce Bancshares, Inc.
). Almost all the abovementioned companies have announced a rise
in regular cash dividend as well as special cash and stock
We believe that even after announcing dividend hikes, BankUnited
will be able to maintain its strong capital and balance sheet
levels. This would position the company comfortably for expansion
via acquisitions as well as through organic growth.
BankUnited currently retains a Zacks #3 Rank, which translates
into a short-term Hold rating. We believe the announcement of
dividend rise will be an appropriate step for the company in
boosting shareholders' confidence, which might lead to positive
estimate revisions. This, in turn, could cause an improvement in
the Zacks Rank.
FRANKLIN RESOUR (BEN): Free Stock Analysis
BANKUNITED INC (BKU): Free Stock Analysis
COMMERCE BANCSH (CBSH): Free Stock Analysis
CITY NATIONAL (CYN): Free Stock Analysis
WADDELL&REED -A (WDR): Free Stock Analysis
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