Grupo Financiero Banorte. de's (BMV:GFNORTEO) Shareholders Will Receive A Bigger Dividend Than Last Year

Grupo Financiero Banorte, S.A.B. de C.V. (BMV:GFNORTEO) will increase its dividend from last year's comparable payment on the 8th of December to MX$5.81. The payment will take the dividend yield to 4.1%, which is in line with the average for the industry.

Check out the opportunities and risks within the MX Banks industry.

Grupo Financiero Banorte. de's Earnings Will Easily Cover The Distributions

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

Grupo Financiero Banorte. de has established itself as a dividend paying company with over 10 years history of distributing earnings to shareholders. Past distributions do not necessarily guarantee future ones, but Grupo Financiero Banorte. de's payout ratio of 40% is a good sign as this means that earnings decently cover dividends.

Over the next 3 years, EPS is forecast to expand by 34.6%. Analysts estimate the future payout ratio will be 56% over the same time period, which is in the range that makes us comfortable with the sustainability of the dividend.

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. Since 2012, the annual payment back then was MX$0.52, compared to the most recent full-year payment of MX$6.08. This works out to be a compound annual growth rate (CAGR) of approximately 28% a year over that time. It is great to see strong growth in the dividend payments, but cuts are concerning as it may indicate the payout policy is too ambitious.

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 Grupo Financiero Banorte. de has grown earnings per share at 13% per year over the past five years. Grupo Financiero Banorte. de definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

We Really Like Grupo Financiero Banorte. de's Dividend

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

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. For example, we've picked out 1 warning sign for Grupo Financiero Banorte. de that investors should know about before committing capital to this stock. Is Grupo Financiero Banorte. de 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.