Prosperity Bancshares (NYSE:PB) Is Paying Out A Larger Dividend Than Last Year

Prosperity Bancshares, Inc. (NYSE:PB) has announced that it will be increasing its dividend from last year's comparable payment on the 3rd of January to $0.55. This makes the dividend yield about the same as the industry average at 3.1%.

See our latest analysis for Prosperity Bancshares

Prosperity Bancshares' Payment Expected To Have Solid Earnings Coverage

Unless the payments are sustainable, the dividend yield doesn't mean too much.

Having distributed dividends for at least 10 years, Prosperity Bancshares has a long history of paying out a part of its earnings to shareholders. Past distributions do not necessarily guarantee future ones, but Prosperity Bancshares' payout ratio of 37% is a good sign as this means that earnings decently cover dividends.

The next 3 years are set to see EPS grow by 22.0%. The future payout ratio could be 35% over that time period, according to analyst estimates, which is a good look for the future of the dividend.

Prosperity Bancshares Has A Solid Track Record

Even over a long history of paying dividends, the company's distributions have been remarkably stable. Since 2012, the dividend has gone from $0.78 total annually to $2.20. This implies that the company grew its distributions at a yearly rate of about 11% over that duration. Rapidly growing dividends for a long time is a very valuable feature for an income stock.

Prosperity Bancshares Could Grow Its Dividend

The company's investors will be pleased to have been receiving dividend income for some time. We are encouraged to see that Prosperity Bancshares has grown earnings per share at 7.4% per year over the past five years. Prosperity Bancshares definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

Prosperity Bancshares Looks Like A Great Dividend Stock

In summary, it is always positive to see the dividend being increased, and we are particularly pleased with its overall sustainability. 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. 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. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. Earnings growth generally bodes well for the future value of company dividend payments. See if the 12 Prosperity Bancshares 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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