CVB Financial Corp. (NASDAQ:CVBF) has announced that it will pay a dividend of US$0.18 per share on the 20th of April. This means that the annual payment will be 3.0% of the current stock price, which is in line with the average for the industry.
CVB Financial's Dividend Is Well Covered By Earnings
Unless the payments are sustainable, the dividend yield doesn't mean too much. Prior to this announcement, CVB Financial's dividend was comfortably covered by both cash flow and earnings. This means that a large portion of its earnings are being retained to grow the business.
EPS is set to fall by 9.5% over the next 12 months. If the dividend continues along recent trends, we estimate the payout ratio could be 58%, which we consider to be quite comfortable, with most of the company's earnings left over to grow the business in the future.
CVB Financial Has A Solid Track Record
The company has an extended history of paying stable dividends. The first annual payment during the last 10 years was US$0.34 in 2012, and the most recent fiscal year payment was US$0.72. This implies that the company grew its distributions at a yearly rate of about 7.8% over that duration. The growth of the dividend has been pretty reliable, so we think this can offer investors some nice additional income in their portfolio.
CVB Financial Could Grow Its Dividend
Investors could be attracted to the stock based on the quality of its payment history. CVB Financial has seen EPS rising for the last five years, at 9.6% per annum. Earnings are on the uptrend, and it is only paying a small portion of those earnings to shareholders.
We Really Like CVB Financial's Dividend
In summary, it is good to see that the dividend is staying consistent, and we don't think there is any reason to suspect this might change over the medium term. The company is generating plenty of cash, and the earnings also quite easily cover the distributions. However, it is worth noting that the earnings are expected to fall over the next year, which may not change the long term outlook, but could affect the dividend payment in the next 12 months. All of these factors considered, we think this has solid potential as a dividend stock.
Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. 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 1 warning sign for CVB Financial that you should be aware of before investing. Is CVB Financial not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.
What are the risks and opportunities for CVB Financial?
Trading at 34.6% below our estimate of its fair value
Earnings are forecast to grow 9.75% per year
Earnings have grown 12.1% per year over the past 5 years
No risks detected for CVBF from our risks checks.
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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.
CVB Financial Corp. operates as a bank holding company for Citizens Business Bank, a state-chartered bank that provides banking and financial services to small to mid-sized businesses and individuals.
Flawless balance sheet established dividend payer.