International Bancshares (NASDAQ:IBOC) Will Pay A Larger Dividend Than Last Year At $0.66

International Bancshares Corporation (NASDAQ:IBOC) will increase its dividend on the 28th of February to $0.66, which is 4.8% higher than last year's payment from the same period of $0.63. Even though the dividend went up, the yield is still quite low at only 2.4%.

View our latest analysis for International Bancshares

International Bancshares' Dividend Forecasted To Be Well Covered By Earnings

While yield is important, another factor to consider about a company's dividend is whether the current payout levels are feasible.

International Bancshares has a long history of paying out dividends, with its current track record at a minimum of 10 years. Using data from its latest earnings report, International Bancshares' payout ratio sits at 19%, an extremely comfortable number that shows that it can pay its dividend.

Looking forward, earnings per share could rise by 16.6% over the next year if the trend from the last few years continues. Assuming the dividend continues along recent trends, we think the future payout ratio could be 19% by next year, which is in a pretty sustainable range.

International Bancshares Has A Solid Track Record

The company has an extended history of paying stable dividends. Since 2014, the dividend has gone from $0.40 total annually to $1.26. 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. International Bancshares has impressed us by growing EPS at 17% per year over the past five years. A low payout ratio and decent growth suggests that the company is reinvesting well, and it also has plenty of room to increase the dividend over time.

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. 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.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. However, there are other things to consider for investors when analysing stock performance. As an example, we've identified 1 warning sign for International Bancshares that you should be aware of before investing. 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.