Prosperity Bancshares (NYSE:PB) Will Pay A Larger Dividend Than Last Year At $0.55

Prosperity Bancshares, Inc. (NYSE:PB) will increase its dividend from last year's comparable payment on the 3rd of January to $0.55. Based on this payment, the dividend yield for the company will be 3.1%, which is fairly typical for the industry.

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Prosperity Bancshares' Earnings Will Easily Cover The Distributions

We aren't too impressed by dividend yields unless they can be sustained over time.

Prosperity Bancshares has established itself as a dividend paying company with over 10 years history of distributing earnings to shareholders. Based on Prosperity Bancshares' last earnings report, the payout ratio is at a decent 37%, meaning that the company is able to pay out its dividend with a bit of room to spare.

Over the next 3 years, EPS is forecast to expand by 20.8%. Analysts forecast the future payout ratio could be 34% over the same time horizon, which is a number we think the company can maintain.

Prosperity Bancshares 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 $0.78 in 2012 to the most recent total annual payment of $2.20. This means that it has been growing its distributions at 11% per annum over that time. So, dividends have been growing pretty quickly, and even more impressively, they haven't experienced any notable falls during this period.

We Could See Prosperity Bancshares' Dividend Growing

Investors could be attracted to the stock based on the quality of its payment history. Prosperity Bancshares has seen EPS rising for the last five years, at 7.4% per annum. With a decent amount of growth and a low payout ratio, we think this bodes well for Prosperity Bancshares' prospects of growing its dividend payments in the future.

Prosperity Bancshares 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. Distributions are quite easily covered by earnings, which are also being converted to cash flows. 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. Earnings growth generally bodes well for the future value of company dividend payments. See if the 10 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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