The board of International Bancshares Corporation (NASDAQ:IBOC) has announced that it will pay a dividend of $0.60 per share on the 29th of August. Based on this payment, the dividend yield will be 2.7%, which is fairly typical for the industry.
International Bancshares' Dividend Forecasted To Be Well Covered By Earnings
While it is always good to see a solid dividend yield, we should also consider whether the payment is feasible.
Having distributed dividends for at least 10 years, International Bancshares has a long history of paying out a part of its earnings to shareholders. Taking data from its last earnings report, calculating for the company's payout ratio shows 34%, which means that International Bancshares would be able to pay its last dividend without pressure on the balance sheet.
If the trend of the last few years continues, EPS will grow by 10.1% over the next 12 months. Assuming the dividend continues along recent trends, we think the future payout ratio could be 35% by next year, which is in a pretty sustainable range.
International Bancshares Has A Solid Track Record
The company has been paying a dividend for a long time, and it has been quite stable which gives us confidence in the future dividend potential. Since 2012, the annual payment back then was $0.38, compared to the most recent full-year payment of $1.20. This works out to be a compound annual growth rate (CAGR) of approximately 12% a year over that time. It is good to see that there has been strong dividend growth, and that there haven't been any cuts for a long time.
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. We are encouraged to see that International Bancshares has grown earnings per share at 10% per year over the past five years. Growth in EPS bodes well for the dividend, as does the low payout ratio that the company is currently reporting.
International Bancshares Looks Like A Great Dividend Stock
Overall, we think that this is a great income investment, and we think that maintaining the dividend this year may have been a conservative choice. Earnings are easily covering distributions, and the company is generating plenty of cash. Taking this all into consideration, this looks like it could be a good dividend opportunity.
Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. Now, if you want to look closer, it would be worth checking out our free research on International Bancshares management tenure, salary, and performance. Is International Bancshares 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 International Bancshares?
Trading at 18.6% below our estimate of its fair value
Earnings have grown 6.8% per year over the past 5 years
No risks detected for IBOC from our risks checks.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.
International Bancshares Corporation, a financial holding company, provides commercial and retail banking services.
The Snowflake is a visual investment summary with the score of each axis being calculated by 6 checks in 5 areas.
|Analysis Area||Score (0-6)|
Read more about these checks in the individual report sections or in our analysis model.
Flawless balance sheet average dividend payer.