Why Atlantic Union (AUB) is a Top Dividend Stock for Your Portfolio

Whether it's through stocks, bonds, ETFs, or other types of securities, all investors love seeing their portfolios score big returns. 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 account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.

Atlantic Union (AUB) is headquartered in Glen Allen, and is in the Finance sector. The stock has seen a price change of -2.49% since the start of the year. The holding company for Atlantic Union Bank is paying out a dividend of $0.37 per share at the moment, with a dividend yield of 4.3% compared to the Banks - Northeast industry's yield of 2.44% and the S&P 500's yield of 1.46%.

Looking at dividend growth, the company's current annualized dividend of $1.48 is up 6.5% from last year. Over the last 5 years, Atlantic Union has increased its dividend 4 times on a year-over-year basis for an average annual increase of 6.64%. 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. Atlantic Union's current payout ratio is 44%, meaning it paid out 44% of its trailing 12-month EPS as dividend.

Looking at this fiscal year, AUB expects solid earnings growth. The Zacks Consensus Estimate for 2026 is $3.77 per share, representing a year-over-year earnings growth rate of 9.59%.

Investors like dividends for many reasons; they greatly improve stock investing profits, decrease overall portfolio risk, and carry tax advantages, among others. It's important to keep in mind that not all companies provide a quarterly payout.

High-growth firms or tech start-ups, for example, rarely provide their shareholders a dividend, while larger, more established companies that have more secure profits are often seen as the best dividend options. 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 AUB 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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