Yahoo Finance CVB Financial (NASDAQ:CVBF) Will Pay A Dividend Of $0.20
CVB Financial Corp. (NASDAQ:CVBF) has announced that it will pay a dividend of $0.20 per share on the 25th of July. This means the annual payment is 4.7% of the current stock price, which is above the average for the industry.
See our latest analysis for CVB Financial
CVB Financial's Payment Expected To Have Solid Earnings Coverage
While it is great to have a strong dividend yield, we should also consider whether the payment is sustainable.
CVB Financial has established itself as a dividend paying company with over 10 years history of distributing earnings to shareholders. Taking data from its last earnings report, calculating for the company's payout ratio shows 53%, which means that CVB Financial would be able to pay its last dividend without pressure on the balance sheet.
EPS is set to fall by 0.2% over the next 12 months. But if the dividend continues along recent trends, we estimate the future payout ratio could be 57%, which we would consider to be quite comfortable looking forward, with most of the company's earnings left over to grow the business in the future.
CVB Financial Has A Solid Track Record
Even over a long history of paying dividends, the company's distributions have been remarkably stable. Since 2014, the annual payment back then was $0.40, compared to the most recent full-year payment of $0.80. This works out to be a compound annual growth rate (CAGR) of approximately 7.2% 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.
Dividend Growth May Be Hard To Achieve
Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. Earnings have grown at around 2.8% a year for the past five years, which isn't massive but still better than seeing them shrink. CVB Financial is struggling to find viable investments, so it is returning more to shareholders. While this isn't necessarily a negative, it definitely signals that dividend growth could be constrained in the future unless earnings start to pick up again.
CVB Financial Looks Like A Great Dividend Stock
Overall, we like to see the dividend staying consistent, and we think CVB Financial might even raise payments in the future. The company is generating plenty of cash, and the earnings also quite easily cover the distributions. We should point out that the earnings are expected to fall over the next 12 months, which won't be a problem if this doesn't become a trend, but could cause some turbulence in the next year. All of these factors considered, we think this has solid potential as a dividend stock.
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. Companies that are growing earnings tend to be the best dividend stocks over the long term. See what the 8 analysts we track are forecasting for CVB Financial for free with public analyst estimates for the company. Is CVB Financial not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.
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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.
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