Here's What We Like About Cullen/Frost Bankers' (NYSE:CFR) Upcoming Dividend
It looks like Cullen/Frost Bankers, Inc. (NYSE:CFR) is about to go ex-dividend in the next three days. The ex-dividend date is usually set to be one business day before the record date which is the cut-off date on which you must be present on the company's books as a shareholder in order to receive the dividend. The ex-dividend date is of consequence because whenever a stock is bought or sold, the trade takes at least two business day to settle. This means that investors who purchase Cullen/Frost Bankers' shares on or after the 28th of February will not receive the dividend, which will be paid on the 15th of March.
The company's upcoming dividend is US$0.92 a share, following on from the last 12 months, when the company distributed a total of US$3.68 per share to shareholders. Based on the last year's worth of payments, Cullen/Frost Bankers stock has a trailing yield of around 3.4% on the current share price of US$107.35. We love seeing companies pay a dividend, but it's also important to be sure that laying the golden eggs isn't going to kill our golden goose! As a result, readers should always check whether Cullen/Frost Bankers has been able to grow its dividends, or if the dividend might be cut.
Check out our latest analysis for Cullen/Frost Bankers
Dividends are usually paid out of company profits, so if a company pays out more than it earned then its dividend is usually at greater risk of being cut. Cullen/Frost Bankers paid out a comfortable 39% of its profit last year.
Companies that pay out less in dividends than they earn in profits generally have more sustainable dividends. The lower the payout ratio, the more wiggle room the business has before it could be forced to cut the dividend.
Click here to see the company's payout ratio, plus analyst estimates of its future dividends.
Have Earnings And Dividends Been Growing?
Businesses with strong growth prospects usually make the best dividend payers, because it's easier to grow dividends when earnings per share are improving. If earnings fall far enough, the company could be forced to cut its dividend. With that in mind, we're encouraged by the steady growth at Cullen/Frost Bankers, with earnings per share up 5.5% on average over the last five years.
The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. In the past 10 years, Cullen/Frost Bankers has increased its dividend at approximately 6.3% a year on average. We're glad to see dividends rising alongside earnings over a number of years, which may be a sign the company intends to share the growth with shareholders.
To Sum It Up
Is Cullen/Frost Bankers worth buying for its dividend? It has been growing its earnings per share somewhat in recent years, although it reinvests more than half its earnings in the business, which could suggest there are some growth projects that have not yet reached fruition. In summary, Cullen/Frost Bankers appears to have some promise as a dividend stock, and we'd suggest taking a closer look at it.
In light of that, while Cullen/Frost Bankers has an appealing dividend, it's worth knowing the risks involved with this stock. For example, we've found 1 warning sign for Cullen/Frost Bankers that we recommend you consider before investing in the business.
If you're in the market for strong dividend payers, we recommend checking 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.
