Why Cullen/Frost Bankers (CFR) is a Great Dividend Stock Right Now
Whether it's through stocks, bonds, ETFs, or other types of securities, all investors love seeing their portfolios score big returns. However, when you're an income investor, your primary focus is generating consistent cash flow from each of your liquid investments.
Cash flow can come from bond interest, interest from other types of investments, and, of course, 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 account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.
Cullen/Frost Bankers (CFR) is headquartered in San Antonio, and is in the Finance sector. The stock has seen a price change of -7% since the start of the year. Currently paying a dividend of $1.00 per share, the company has a dividend yield of 3.2%. In comparison, the Banks - Southwest industry's yield is 1.34%, while the S&P 500's yield is 1.5%.
Looking at dividend growth, the company's current annualized dividend of $4.00 is up 7% from last year. Over the last 5 years, Cullen/Frost Bankers has increased its dividend 5 times on a year-over-year basis for an average annual increase of 7.98%. Looking ahead, future dividend growth will be dependent on earnings growth and payout ratio, which is the proportion of a company's annual earnings per share that it pays out as a dividend. Cullen/Frost's current payout ratio is 43%, meaning it paid out 43% of its trailing 12-month EPS as dividend.
CFR is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2025 is $9.31 per share, with earnings expected to increase 3.67% from the year ago period.
Investors like dividends for a variety of different reasons, from tax advantages and decreasing overall portfolio risk to considerably improving stock investing profits. But, not every company offers a quarterly payout.
Big, established firms that have more secure profits are often seen as the best dividend options, but it's fairly uncommon to see high-growth businesses or tech start-ups offer their stockholders a dividend. 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, CFR 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).
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Cullen/Frost Bankers, Inc. (CFR): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).
Source Zacks-com
