Cullen/Frost Bankers' (NYSE:CFR) Dividend Will Be Increased To $0.95

The board of Cullen/Frost Bankers, Inc. (NYSE:CFR) has announced that it will be paying its dividend of $0.95 on the 13th of September, an increased payment from last year's comparable dividend. This makes the dividend yield about the same as the industry average at 3.2%.

View our latest analysis for Cullen/Frost Bankers

Cullen/Frost Bankers' 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.

Cullen/Frost Bankers has a long history of paying out dividends, with its current track record at a minimum of 10 years. Taking data from its last earnings report, calculating for the company's payout ratio shows 45%, which means that Cullen/Frost Bankers would be able to pay its last dividend without pressure on the balance sheet.

Looking forward, EPS is forecast to rise by 10.9% over the next 3 years. The future payout ratio could be 44% over that time period, according to analyst estimates, which is a good look for the future of the dividend.

Cullen/Frost Bankers Has A Solid Track Record

The company has an extended history of paying stable dividends. Since 2014, the annual payment back then was $2.00, compared to the most recent full-year payment of $3.80. This works out to be a compound annual growth rate (CAGR) of approximately 6.6% a year over that time. The dividend has been growing very nicely for a number of years, and has given its shareholders some nice income in their portfolios.

The Dividend's Growth Prospects Are Limited

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. Earnings per share has been crawling upwards at 2.8% per year. Cullen/Frost Bankers is struggling to find viable investments, so it is returning more to shareholders. This could mean the dividend doesn't have the growth potential we look for going into the future.

Cullen/Frost Bankers Looks Like A Great Dividend Stock

Overall, a dividend increase is always good, and we think that Cullen/Frost Bankers is a strong income stock thanks to its track record and growing earnings. 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.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. However, there are other things to consider for investors when analysing stock performance. Companies that are growing earnings tend to be the best dividend stocks over the long term. See what the 15 analysts we track are forecasting for Cullen/Frost Bankers for free with public analyst estimates for the company. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com