First Busey (BUSE) Could Be a Great Choice

All investors love getting big returns from their portfolio, whether it's through stocks, bonds, ETFs, or other types of securities. 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 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.

Headquartered in Leawood, First Busey (BUSE) is a Finance stock that has seen a price change of 30.68% so far this year. The bank holding company is currently shelling out a dividend of $0.26 per share, with a dividend yield of 3.35%. This compares to the Banks - Midwest industry's yield of 2.41% and the S&P 500's yield of 1.3%.

Looking at dividend growth, the company's current annualized dividend of $1.04 is up 4% from last year. Over the last 5 years, First Busey has increased its dividend 3 times on a year-over-year basis for an average annual increase of 2.23%. 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. First Busey's current payout ratio is 39%, meaning it paid out 39% of its trailing 12-month EPS as dividend.

Earnings growth looks solid for BUSE for this fiscal year. The Zacks Consensus Estimate for 2026 is $2.67 per share, which represents a year-over-year growth rate of 5.53%.

Investors like dividends for a variety of different reasons, from tax advantages and decreasing overall portfolio risk to considerably improving stock investing profits. It's important to keep in mind that not all companies provide 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 BUSE is not only an attractive dividend play, but is also 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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