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BankUnited (BKU) Stock up 3.4% on New Share Repurchase Plan

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BankUnited, Inc. BKU has announced a new share repurchase plan. The company’s board of directors has approved the repurchase of up to $150 million in shares of BKU’s outstanding stock. There is no expiration date for this program. Shares of the company were up 3.4% following this announcement late last week.

The new repurchase plan is of the same value as the previous one announced in October 2021. As of Dec 31, 2021, $26.5 million worth of shares were left to be repurchased under this old program.

Share buybacks aside, the company has been regularly paying dividends. Since April 2020, BankUnited has been paying 23 cents per share as quarterly dividend. Prior to that, the company paid 21 cents per share.

Based on yesterday’s closing price of $43.53, the company’s dividend yield currently stands at 2.11%. This yield is not only attractive for income investors, but also represents a steady income stream.

BankUnited had total debt worth $2.8 billion, higher than its cash and cash equivalent balance of $314.9 million, as of Dec 31, 2021. However, its times-interest-earned ratio of 5.7 at the end of fourth-quarter 2021 has improved sequentially. Given the company's decent earnings strength, it is expected to continue meeting debt obligations in the near term, even if the economic situation worsens.

Supported by its earnings strength and a solid balance sheet, BankUnited is expected to continue with efficient capital deployment activities. Through this, it will keep enhancing shareholder value.

Over the past three months, shares of BKU have gained 1.3% against 0.8% decline of the industry it belongs to.

Zacks Investment Research
Zacks Investment Research

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BankUnited currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Other Finance Stocks That Took Similar Steps

Over the past couple of months, several finance companies have rewarded shareholders with new share-repurchase programs. Some of these are KKR & Co. Inc. KKR, Ally Financial Inc. ALLY and Prosperity Bancshares, Inc. PB.

KKR has increased share repurchase amount to $500 million, per a recent 8K filing. The company anticipates that the program will remain effective until the maximum approved amount gets spent. The buyback program has no expiration date.

Other than repurchases of common stock, the buyback program will be utilized to retire equity awards granted per KKR’s equity incentive plans representing the right to receive common stock.

Ally Financial’s board of directors has approved the repurchase of $2 million of the outstanding stock. ALLY’s new buyback plan expires on Dec 31, 2022.

In 2021, Ally Financial completed a $2.0 billion share repurchase program.

Prosperity Bancshares announced that its board of directors has authorized the repurchase of up to 5% or 4.6 million of its outstanding stock. The new plan will be effective till Jan 18, 2023.

In 2021, Prosperity Bancshares repurchased 767,134 shares at an average price of $67.87 per share.


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