Cullen/Frost Bankers (NYSE:CFR) Is Increasing Its Dividend To $0.92
Cullen/Frost Bankers, Inc.'s (NYSE:CFR) dividend will be increasing from last year's payment of the same period to $0.92 on 15th of September. The payment will take the dividend yield to 3.5%, which is in line with the average for the industry.
View our latest analysis for Cullen/Frost Bankers
Cullen/Frost Bankers' Dividend Forecasted To Be Well Covered By Earnings
Unless the payments are sustainable, the dividend yield doesn't mean too much.
Having distributed dividends for at least 10 years, Cullen/Frost Bankers has a long history of paying out a part of its earnings to shareholders. Taking data from its last earnings report, calculating for the company's payout ratio shows 33%, which means that Cullen/Frost Bankers would be able to pay its last dividend without pressure on the balance sheet.
Looking forward, earnings per share is forecast to fall by 16.4% over the next 3 years. Despite that, analysts estimate the future payout ratio could be 42% over the same time period, which is in a pretty comfortable range.
Cullen/Frost Bankers Has A Solid Track Record
The company has been paying a dividend for a long time, and it has been quite stable which gives us confidence in the future dividend potential. The annual payment during the last 10 years was $1.92 in 2013, and the most recent fiscal year payment was $3.68. This implies that the company grew its distributions at a yearly rate of about 6.7% over that duration. Companies like this can be very valuable over the long term, if the decent rate of growth can be maintained.
The Dividend Looks Likely To Grow
Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. It's encouraging to see that Cullen/Frost Bankers has been growing its earnings per share at 11% a year over the past five years. Growth in EPS bodes well for the dividend, as does the low payout ratio that the company is currently reporting.
We Really Like Cullen/Frost Bankers' Dividend
In summary, it is always positive to see the dividend being increased, and we are particularly pleased with its overall sustainability. The earnings easily cover the company's distributions, and the company is generating plenty of cash. 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.
Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. As an example, we've identified 1 warning sign for Cullen/Frost Bankers that you should be aware of before investing. Is Cullen/Frost Bankers not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.
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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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