Why United Bankshares (UBSI) is a Top Dividend Stock for Your Portfolio

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 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 make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.

Headquartered in Charleston, United Bankshares (UBSI) is a Finance stock that has seen a price change of 13.75% so far this year. The holding company for United Bank is currently shelling out a dividend of $0.38 per share, with a dividend yield of 3.48%. This compares to the Banks - Southeast industry's yield of 2.04% and the S&P 500's yield of 1.39%.

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 43%, meaning it paid out 43% of its trailing 12-month EPS as dividend.

UBSI is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2026 is $3.64 per share, which represents a year-over-year growth rate of 11.31%.

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. That said, they can take comfort from the fact that UBSI is not only an attractive dividend play, but also represents a compelling investment opportunity with a Zacks Rank of #2 (Buy).

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This article originally published on Zacks Investment Research (zacks.com).

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