Banco Bilbao Vizcaya Argentaria's (BME:BBVA) Shareholders Will Receive A Bigger Dividend Than Last Year

Banco Bilbao Vizcaya Argentaria, S.A. (BME:BBVA) will increase its dividend from last year's comparable payment on the 10th of April to €0.3321. The payment will take the dividend yield to 5.4%, which is in line with the average for the industry.

While the dividend yield is important for income investors, it is also important to consider any large share price moves, as this will generally outweigh any gains from distributions. Investors will be pleased to see that Banco Bilbao Vizcaya Argentaria's stock price has increased by 41% in the last 3 months, which is good for shareholders and can also explain a decrease in the dividend yield.

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

We like to see a healthy dividend yield, but that is only helpful to us if the payment can continue.

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 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. The future payout ratio could be 49% over that time period, according to analyst estimates, which is a good look for the future of the dividend.

View our latest analysis for Banco Bilbao Vizcaya Argentaria

Dividend Volatility

While the company has been paying a dividend for a long time, it has cut the dividend at least once in the last 10 years. The dividend has gone from an annual total of €0.10 in 2015 to the most recent total annual payment of €0.70. This works out to be a compound annual growth rate (CAGR) of approximately 21% 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. We are encouraged to see that Banco Bilbao Vizcaya Argentaria has grown earnings per share at 24% per year over the past five years. The company's earnings per share has grown rapidly in recent years, and it has a good balance between reinvesting and paying dividends to shareholders, so we think that Banco Bilbao Vizcaya Argentaria could prove to be a strong dividend payer.

We Really Like Banco Bilbao Vizcaya Argentaria's Dividend

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 in all, this checks a lot of the boxes we look for when choosing an income stock.

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 instance, we've picked out 1 warning sign for Banco Bilbao Vizcaya Argentaria that investors should take into consideration. 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.