Cullen/Frost Bankers (NYSE:CFR) Is Paying Out A Larger Dividend Than Last Year

Cullen/Frost Bankers, Inc. (NYSE:CFR) has announced that it will be increasing its dividend from last year's comparable payment on the 13th of June to $1.00. Based on this payment, the dividend yield for the company will be 3.3%, which is fairly typical for the industry.

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Cullen/Frost Bankers' Payment Expected To Have Solid Earnings Coverage

We like to see a healthy dividend yield, but that is only helpful to us if the payment can continue.

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 41%, which means that Cullen/Frost Bankers would be able to pay its last dividend without pressure on the balance sheet.

Over the next 3 years, EPS is forecast to fall by 5.0%. However, as estimated by analysts, the future payout ratio could be 44% over the same time period, which we think the company can easily maintain.

See our latest analysis for Cullen/Frost Bankers

Cullen/Frost Bankers Has A Solid Track Record

The company has an extended history of paying stable dividends. The annual payment during the last 10 years was $2.04 in 2015, and the most recent fiscal year payment was $4.00. This means that it has been growing its distributions at 7.0% per annum 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 Has Growth Potential

Investors could be attracted to the stock based on the quality of its payment history. Cullen/Frost Bankers has seen EPS rising for the last five years, at 9.3% per annum. Shareholders are getting plenty of the earnings returned to them, which combined with strong growth makes this quite appealing.

Cullen/Frost Bankers Looks Like A Great Dividend Stock

Overall, we think this could be an attractive income stock, and it is only getting better by paying a higher dividend this year. The earnings easily cover the company's distributions, and the company is generating plenty of cash. If earnings do fall over the next 12 months, the dividend could be buffeted a little bit, but we don't think it should cause too much of a problem in the long term. All of these factors considered, we think this has solid potential as a dividend stock.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. Earnings growth generally bodes well for the future value of company dividend payments. See if the 12 Cullen/Frost Bankers analysts we track are forecasting continued growth with our free report on analyst estimates for the company. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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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.