Capital One Financial (NYSE:COF) Will Pay A Dividend Of $0.60
The board of Capital One Financial Corporation (NYSE:COF) has announced that it will pay a dividend of $0.60 per share on the 17th of February. This means that the annual payment will be 2.1% of the current stock price, which is in line with the average for the industry.
Check out our latest analysis for Capital One Financial
Capital One Financial's Dividend Forecasted To Be Well Covered By Earnings
Solid dividend yields are great, but they only really help us if the payment is sustainable.
Capital One Financial has a long history of paying out dividends, with its current track record at a minimum of 10 years. While past data isn't a guarantee for the future, Capital One Financial's latest earnings report puts its payout ratio at 13%, showing that the company can pay out its dividends comfortably.
EPS is set to fall by 12.4% over the next 3 years. Fortunately, analysts forecast the future payout ratio to be 16% over the same time horizon, which is in the range that makes us comfortable with the sustainability of the dividend.
The company's dividend history has been marked by instability, with at least one cut in the last 10 years. The annual payment during the last 10 years was $0.20 in 2013, and the most recent fiscal year payment was $2.40. This works out to be a compound annual growth rate (CAGR) of approximately 28% a year over that time. Capital One Financial has grown distributions at a rapid rate despite cutting the dividend at least once in the past. Companies that cut once often cut again, so we would be cautious about buying this stock solely for the dividend income.
The Dividend Looks Likely To Grow
With a relatively unstable dividend, it's even more important to evaluate if earnings per share is growing, which could point to a growing dividend in the future. Capital One Financial has impressed us by growing EPS at 37% per year over the past five years. Earnings have been growing rapidly, and with a low payout ratio we think that the company could turn out to be a great dividend stock.
We Really Like Capital One Financial's Dividend
Overall, we like to see the dividend staying consistent, and we think Capital One Financial might even raise payments in the future. The distributions are easily covered by earnings, and there is plenty of cash being generated as well. However, it is worth noting that the earnings are expected to fall over the next year, which may not change the long term outlook, but could affect the dividend payment in the next 12 months. Taking this all into consideration, this looks like it could be a good dividend opportunity.
It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. To that end, Capital One Financial has 4 warning signs (and 1 which is a bit unpleasant) we think you should know about. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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