Regular readers will know that we love our dividends at Simply Wall St, which is why it’s exciting to see International Bancshares Corporation (NASDAQ:IBOC) is about to trade ex-dividend in the next four days. You will need to purchase shares before the 18th of September to receive the dividend, which will be paid on the 5th of October.
International Bancshares’s next dividend payment will be US$0.55 per share, and in the last 12 months, the company paid a total of US$1.10 per share. Calculating the last year’s worth of payments shows that International Bancshares has a trailing yield of 3.7% on the current share price of $29.61. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. As a result, readers should always check whether International Bancshares has been able to grow its dividends, or if the dividend might be cut.
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. International Bancshares paid out a comfortable 40% of its profit last year.
When a company paid out less in dividends than it earned in profit, this generally suggests its dividend is affordable. The lower the % of its profit that it pays out, the greater the margin of safety for the dividend if the business enters a downturn.
Have Earnings And Dividends Been Growing?
Companies with consistently growing earnings per share generally make the best dividend stocks, as they usually find it easier to grow dividends per share. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. This is why it’s a relief to see International Bancshares earnings per share are up 3.9% per annum over the last five years.
Another key way to measure a company’s dividend prospects is by measuring its historical rate of dividend growth. Since the start of our data, 10 years ago, International Bancshares has lifted its dividend by approximately 12% 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.
The Bottom Line
Is International Bancshares an attractive dividend stock, or better left on the shelf? International Bancshares has seen its earnings per share grow slowly in recent years, and the company reinvests more than half of its profits in the business, which generally bodes well for its future prospects. Overall, International Bancshares looks like a promising dividend stock in this analysis, and we think it would be worth investigating further.
On that note, you’ll want to research what risks International Bancshares is facing. To help with this, we’ve discovered 1 warning sign for International Bancshares that you should be aware of before investing in their shares.
If you’re in the market for dividend stocks, we recommend checking our list of top dividend stocks with a greater than 2% yield and an upcoming dividend.
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This article by Simply Wall St is general in nature. 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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