Cullen/Frost Bankers' (NYSE:CFR) Upcoming Dividend Will Be Larger Than Last Year's

Cullen/Frost Bankers, Inc.'s (NYSE:CFR) dividend will be increasing from last year's payment of the same period to $0.92 on 15th of September. The payment will take the dividend yield to 3.5%, which is in line with the average for the industry.

Check out our latest analysis for Cullen/Frost Bankers

Cullen/Frost Bankers' 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.

Cullen/Frost Bankers has a long history of paying out dividends, with its current track record at a minimum of 10 years. Past distributions do not necessarily guarantee future ones, but Cullen/Frost Bankers' payout ratio of 33% is a good sign as this means that earnings decently cover dividends.

Over the next 3 years, EPS is forecast to fall by 16.4%. Fortunately, analysts forecast the future payout ratio to be 42% over the same time horizon, which is in the range that makes us comfortable with the sustainability of the dividend.

Cullen/Frost Bankers Has A Solid Track Record

Even over a long history of paying dividends, the company's distributions have been remarkably stable. The dividend has gone from an annual total of $1.92 in 2013 to the most recent total annual payment of $3.68. This works out to be a compound annual growth rate (CAGR) of approximately 6.7% a year over that time. The growth of the dividend has been pretty reliable, so we think this can offer investors some nice additional income in their portfolio.

The Dividend Looks Likely To Grow

The company's investors will be pleased to have been receiving dividend income for some time. Cullen/Frost Bankers has seen EPS rising for the last five years, at 11% per annum. 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.

We Really Like Cullen/Frost Bankers' Dividend

Overall, we think this could be an attractive income stock, and it is only getting better by paying a higher dividend this year. The company is generating plenty of cash, and the earnings also quite easily cover the distributions. 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. However, there are other things to consider for investors when analysing stock performance. As an example, we've identified 1 warning sign for Cullen/Frost Bankers that you should be aware of before investing. 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.