Banco Bilbao Vizcaya Argentaria (BME:BBVA) Is Increasing Its Dividend To €0.3321

The board of Banco Bilbao Vizcaya Argentaria, S.A. (BME:BBVA) has announced that it will be paying its dividend of €0.3321 on the 10th of April, an increased payment from last year's comparable dividend. This takes the dividend yield to 6.5%, which shareholders will be pleased with.

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Banco Bilbao Vizcaya Argentaria's Payment Expected To Have Solid Earnings Coverage

Impressive dividend yields are good, but this doesn't matter much if the payments can't be sustained.

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 42%, 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 7.5% over the next 3 years. Analysts estimate the future payout ratio will be 49% over the same time period, which is in the range that makes us comfortable with the sustainability of the dividend.

See our latest analysis for Banco Bilbao Vizcaya Argentaria

Dividend Volatility

Although the company has a long dividend history, it has been cut at least once in the last 10 years. Since 2015, the annual payment back then was €0.10, compared to the most recent full-year payment of €0.70. This implies that the company grew its distributions at a yearly rate of about 21% over that duration. 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

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 24% a year over the past five years. The company doesn't have any problems growing, despite returning a lot of capital to shareholders, which is a very nice combination for a dividend stock to have.

Banco Bilbao Vizcaya Argentaria Looks Like A Great Dividend Stock

In summary, it is always positive to see the dividend being increased, and we are particularly pleased with its overall sustainability. 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. All of these factors considered, we think this has solid potential as a dividend stock.

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 2 warning signs for Banco Bilbao Vizcaya Argentaria that you should be aware of before investing. Is Banco Bilbao Vizcaya Argentaria 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.