Whether it's through stocks, bonds, ETFs, or other types of securities, all investors love seeing their portfolios score big returns. But for income investors, generating consistent cash flow from each of your liquid investments is your primary focus.
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.
Cullen/Frost Bankers in Focus
Cullen/Frost Bankers (CFR) is headquartered in San Antonio, and is in the Finance sector. The stock has seen a price change of 1.97% since the start of the year. Currently paying a dividend of $0.75 per share, the company has a dividend yield of 2.33%. In comparison, the Banks - Southwest industry's yield is 1.42%, while the S&P 500's yield is 1.62%.
Looking at dividend growth, the company's current annualized dividend of $3 is up 2% from last year. In the past five-year period, Cullen/Frost Bankers has increased its dividend 4 times on a year-over-year basis for an average annual increase of 5.37%. 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. Right now, Cullen/Frost's payout ratio is 46%, which means it paid out 46% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for CFR for this fiscal year. The Zacks Consensus Estimate for 2022 is $7.85 per share, representing a year-over-year earnings growth rate of 16.12%.
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.
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. With that in mind, CFR is a compelling investment opportunity. Not only is it a strong dividend play, but the stock currently sits at a Zacks Rank of 3 (Hold).
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CullenFrost Bankers, Inc. (CFR) : Free Stock Analysis Report
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