Capital One Financial (NYSE:COF) Is Due To Pay A Dividend Of $0.60

Capital One Financial Corporation (NYSE:COF) will pay a dividend of $0.60 on the 23rd of February. This means the dividend yield will be fairly typical at 1.8%.

View our latest analysis for Capital One Financial

Capital One Financial's 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, Capital One Financial has a long history of paying out a part of its earnings to shareholders. While past data isn't a guarantee for the future, Capital One Financial's latest earnings report puts its payout ratio at 20%, showing that the company can pay out its dividends comfortably.

Over the next 3 years, EPS is forecast to expand by 50.1%. Analysts forecast the future payout ratio could be 17% over the same time horizon, which is a number we think the company can maintain.

Dividend Volatility

The company's dividend history has been marked by instability, with at least one cut in the last 10 years. Since 2014, the dividend has gone from $1.20 total annually to $2.40. This means that it has been growing its distributions at 7.2% per annum over that time. It's good to see the dividend growing at a decent rate, but the dividend has been cut at least once in the past. Capital One Financial might have put its house in order since then, but we remain cautious.

Capital One Financial May Find It Hard To Grow The Dividend

With a relatively unstable dividend, it's even more important to evaluate if earnings per share is growing, which could point to a growing dividend in the future. Capital One Financial hasn't seen much change in its earnings per share over the last five years. While growth may be thin on the ground, Capital One Financial could always pay out a higher proportion of earnings to increase shareholder returns.

Our Thoughts On Capital One Financial's Dividend

Overall, we think Capital One Financial is a solid choice as a dividend stock, even though the dividend wasn't raised this year. The dividend has been at reasonable levels historically, but that hasn't translated into a consistent payment. The payment isn't stellar, but it could make a decent addition to a dividend portfolio.

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. For example, we've picked out 1 warning sign for Capital One Financial that investors should know about before committing capital to this stock. 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.