Why CVB Financial (CVBF) is a Great Dividend Stock Right Now

Getting big returns from financial portfolios, whether through stocks, bonds, ETFs, other securities, or a combination of all, is an investor's dream. But when you're an income investor, your primary focus is generating consistent cash flow from each of your liquid investments.

While cash flow can come from bond interest or interest from other types of investments, income investors hone in on dividends. A dividend is the distribution of a company's earnings paid out to shareholders; it's often viewed by its dividend yield, a metric that measures a dividend as a percent of the current stock price. Many academic studies show that dividends make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.

CVB Financial in Focus

CVB Financial (CVBF) is headquartered in Ontario, and is in the Finance sector. The stock has seen a price change of 19.99% since the start of the year. Currently paying a dividend of $0.19 per share, the company has a dividend yield of 2.96%. In comparison, the Banks - West industry's yield is 2.62%, while the S&P 500's yield is 1.65%.

Looking at dividend growth, the company's current annualized dividend of $0.76 is up 5.6% from last year. In the past five-year period, CVB Financial has increased its dividend 3 times on a year-over-year basis for an average annual increase of 7.45%. Any future dividend growth will depend on both earnings growth and the company's payout ratio; a payout ratio is the proportion of a firm's annual earnings per share that it pays out as a dividend. CVB Financial's current payout ratio is 52%. This means it paid out 52% of its trailing 12-month EPS as dividend.

CVBF is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2022 is $1.65 per share, representing a year-over-year earnings growth rate of 5.77%.

Bottom Line

Investors like dividends for a variety of different reasons, from tax advantages and decreasing overall portfolio risk to considerably improving stock investing profits. It's important to keep in mind that not all companies provide a quarterly payout.

High-growth firms or tech start-ups, for example, rarely provide their shareholders a dividend, while larger, more established companies that have more secure profits are often seen as the best dividend options. Income investors have to be mindful of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. With that in mind, CVBF is a compelling investment opportunity. Not only is it a strong dividend play, but the stock currently sits at a Zacks Rank of 3 (Hold).

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
CVB Financial Corporation (CVBF) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research