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

Banco Bilbao Vizcaya Argentaria, S.A. (BME:BBVA) has announced that it will be increasing its dividend from last year's comparable payment on the 10th of April to €0.3159. Based on this payment, the dividend yield for the company will be 5.2%, which is fairly typical for the industry.

Check out our latest analysis for Banco Bilbao Vizcaya Argentaria

Banco Bilbao Vizcaya Argentaria's Dividend Forecasted To Be Well Covered By Earnings

While it is always good to see a solid dividend yield, we should also consider whether the payment is feasible.

Banco Bilbao Vizcaya Argentaria has established itself as a dividend paying company with over 10 years history of distributing earnings to shareholders. 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.

The next 3 years are set to see EPS grow by 11.2%. Analysts forecast the future payout ratio could be 45% over the same time horizon, which is a number we think the company can maintain.

Dividend Volatility

The company has a long dividend track record, but it doesn't look great with cuts in the past. Since 2014, the annual payment back then was €0.10, compared to the most recent full-year payment of €0.55. This works out to be a compound annual growth rate (CAGR) of approximately 19% a year over that time. Despite the rapid growth in the dividend over the past number of years, we have seen the payments go down the past as well, so that makes us cautious.

The Dividend Looks Likely To Grow

Given that the dividend has been cut in the past, we need to check if earnings are growing and if that might lead to stronger dividends in the future. Banco Bilbao Vizcaya Argentaria has impressed us by growing EPS at 16% per year over the past five years. Since earnings per share is growing at an acceptable rate, and the payout policy is balanced, we think the company is positioning itself well to grow earnings and dividends in the future.

We Really Like Banco Bilbao Vizcaya Argentaria's Dividend

Overall, a dividend increase is always good, and we think that Banco Bilbao Vizcaya Argentaria is a strong income stock thanks to its track record and growing earnings. The company is easily earning enough to cover its dividend payments and it is great to see that these earnings are being translated into cash flow. 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. However, there are other things to consider for investors when analysing stock performance. For example, we've identified 2 warning signs for Banco Bilbao Vizcaya Argentaria (1 can't be ignored!) that you should be aware of before investing. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.