CVB Financial Corp. (NASDAQ:CVBF) has announced that it will be increasing its dividend from last year's comparable payment on the 20th of October to $0.20. Based on this payment, the dividend yield for the company will be 3.0%, which is fairly typical for the industry.
CVB Financial's Dividend Forecasted To Be Well Covered By Earnings
While it is always good to see a solid dividend yield, we should also consider whether the payment is feasible.
CVB Financial has a long history of paying out dividends, with its current track record at a minimum of 10 years. Past distributions do not necessarily guarantee future ones, but CVB Financial's payout ratio of 50% is a good sign as this means that earnings decently cover dividends.
The next year is set to see EPS grow by 45.2%. If the dividend continues on this path, the future payout ratio could be 39% by next year, which we think can be pretty sustainable going forward.
CVB Financial Has A Solid Track Record
The company has an extended history of paying stable dividends. Since 2012, the annual payment back then was $0.34, compared to the most recent full-year payment of $0.80. This means that it has been growing its distributions at 8.9% per annum over that time. The dividend has been growing very nicely for a number of years, and has given its shareholders some nice income in their portfolios.
The Dividend Has Growth Potential
Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. CVB Financial has impressed us by growing EPS at 7.4% per year over the past five years. Since earnings per share is growing at an acceptable rate, and the payout policy is balanced, we think the company is positioning itself well to grow earnings and dividends in the future.
CVB Financial 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. Earnings are easily covering distributions, and the company is generating plenty of cash. 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. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. Taking the debate a bit further, we've identified 1 warning sign for CVB Financial that investors need to be conscious of moving forward. If you are a dividend investor, you might also want to look at our curated list of high yield dividend stocks.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.
Join A Paid User Research Session
You’ll receive a US$30 Amazon Gift card for 1 hour of your time while helping us build better investing tools for the individual investors like yourself. Sign up here