The board of CVB Financial Corp. (NASDAQ:CVBF) has announced that it will pay a dividend on the 21st of October, with investors receiving US$0.18 per share. Based on this payment, the dividend yield on the company’s stock will be 3.6%, which is an attractive boost to shareholder returns.
CVB Financial’s Dividend Is Well Covered By Earnings
While it is great to have a strong dividend yield, we should also consider whether the payment is sustainable. Based on the last payment, CVB Financial was quite comfortably earning enough to cover the dividend. This means that a large portion of its earnings are being retained to grow the business.
Over the next year, EPS is forecast to fall by 5.4%. If the dividend continues along recent trends, we estimate the payout ratio could be 53%, which we consider to be quite comfortable, with most of the company’s earnings left over to grow the business in the future.
CVB Financial Has A Solid Track Record
The company has a sustained record of paying dividends with very little fluctuation. Since 2011, the dividend has gone from US$0.34 to US$0.72. This implies that the company grew its distributions at a yearly rate of about 7.8% over that duration. The growth of the dividend has been pretty reliable, so we think this can offer investors some nice additional income in their portfolio.
CVB Financial Could Grow Its Dividend
The company’s investors will be pleased to have been receiving dividend income for some time. It’s encouraging to see CVB Financial has been growing its earnings per share at 9.6% a year over the past five years. Earnings are on the uptrend, and it is only paying a small portion of those earnings to shareholders.
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 distributions are easily covered by earnings, and there is plenty of cash being generated as well. However, it is worth noting that the earnings are expected to fall over the next year, which may not change the long term outlook, but could affect the dividend payment in the next 12 months. All in all, this checks a lot of the boxes we look for when choosing an income stock.
It’s important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. Companies that are growing earnings tend to be the best dividend stocks over the long term. See what the 6 analysts we track are forecasting for CVB Financial for free with public analyst estimates for the company. We have also put together a list of global stocks with a solid dividend.
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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