Banco Bilbao Vizcaya Argentaria (BME:BBVA) Is Increasing Its Dividend To €0.3159

Banco Bilbao Vizcaya Argentaria, S.A.'s (BME:BBVA) dividend will be increasing from last year's payment of the same period to €0.3159 on 10th of April. This makes the dividend yield about the same as the industry average at 6.0%.

Check out our latest analysis for Banco Bilbao Vizcaya Argentaria

Banco Bilbao Vizcaya Argentaria's Earnings Will Easily Cover The Distributions

We like a dividend to be consistent over the long term, so checking whether it is sustainable is important.

Banco Bilbao Vizcaya Argentaria has a long history of paying out dividends, with its current track record at a minimum of 10 years. Taking data from its last earnings report, calculating for the company's payout ratio shows 43%, which means that Banco Bilbao Vizcaya Argentaria would be able to pay its last dividend without pressure on the balance sheet.

Looking forward, EPS is forecast to rise by 8.4% over the next 3 years. Analysts forecast the future payout ratio could be 46% over the same time horizon, which is a number we think the company can maintain.

Dividend Volatility

The company's dividend history has been marked by instability, with at least one cut in the last 10 years. The dividend has gone from an annual total of €0.20 in 2014 to the most recent total annual payment of €0.55. This works out to be a compound annual growth rate (CAGR) of approximately 11% a year over that time. Banco Bilbao Vizcaya Argentaria 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 see if earnings per share is growing. It's encouraging to see that Banco Bilbao Vizcaya Argentaria has been growing its earnings per share at 16% a year over the past five years. Earnings are on the uptrend, and it is only paying a small portion of those earnings to shareholders.

Banco Bilbao Vizcaya Argentaria Looks Like A Great Dividend Stock

Overall, we think this could be an attractive income stock, and it is only getting better by paying a higher dividend this year. Earnings are easily covering distributions, and the company is generating plenty of cash. All of these factors considered, we think this has solid potential as a dividend stock.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. For example, we've identified 2 warning signs for Banco Bilbao Vizcaya Argentaria (1 shouldn't be ignored!) that you should be aware of before investing. If you are a dividend investor, you might also want to look at our curated list of high yield 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.