International Bancshares (NASDAQ:IBOC) Has Announced That It Will Be Increasing Its Dividend To US$0.60

International Bancshares Corporation (NASDAQ:IBOC) will increase its dividend on the 28th of February to US$0.60. This takes the dividend yield from 2.8% to 2.8%, which shareholders will be pleased with.

View our latest analysis for International Bancshares

International Bancshares' Payment Has Solid Earnings Coverage

We like to see robust dividend yields, but that doesn't matter if the payment isn't sustainable. However, prior to this announcement, International Bancshares' dividend was comfortably covered by both cash flow and earnings. This means that most of what the business earns is being used to help it grow.

If the trend of the last few years continues, EPS will grow by 13.9% over the next 12 months. If the dividend continues on this path, the payout ratio could be 31% by next year, which we think can be pretty sustainable going forward.

International Bancshares Has A Solid Track Record

The company has an extended history of paying stable dividends. Since 2012, the first annual payment was US$0.38, compared to the most recent full-year payment of US$1.20. This implies that the company grew its distributions at a yearly rate of about 12% over that duration. Rapidly growing dividends for a long time is a very valuable feature for an income stock.

The Dividend Looks Likely To Grow

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. International Bancshares has seen EPS rising for the last five years, at 14% per annum. International Bancshares definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

International Bancshares Looks Like A Great Dividend Stock

Overall, a dividend increase is always good, and we think that International Bancshares is a strong income stock thanks to its track record and growing earnings. Distributions are quite easily covered by earnings, which are also being converted to cash flows. All in all, this checks a lot of the boxes we look for when choosing an income stock.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. Now, if you want to look closer, it would be worth checking out our free research on International Bancshares management tenure, salary, and performance. We have also put together a list of global stocks with a solid dividend.

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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.