CVB Financial (NASDAQ:CVBF) Has Announced A Dividend Of $0.20

Simply Wall St · 07/01 10:12

The board of CVB Financial Corp. (NASDAQ:CVBF) has announced that it will pay a dividend of $0.20 per share on the 25th of July. This makes the dividend yield 4.6%, which will augment investor returns quite nicely.

Check out our latest analysis for CVB Financial

CVB Financial's Earnings Will Easily Cover The Distributions

A big dividend yield for a few years doesn't mean much if it can't be sustained.

CVB Financial has established itself as a dividend paying company with over 10 years history of distributing earnings to shareholders. Based on CVB Financial's last earnings report, the payout ratio is at a decent 53%, meaning that the company is able to pay out its dividend with a bit of room to spare.

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.

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NasdaqGS:CVBF Historic Dividend July 1st 2024

CVB Financial Has A Solid Track Record

The company has been paying a dividend for a long time, and it has been quite stable which gives us confidence in the future dividend potential. Since 2014, the dividend has gone from $0.40 total annually to $0.80. This implies that the company grew its distributions at a yearly rate of about 7.2% over that duration. Dividends have grown at a reasonable rate over this period, and without any major cuts in the payment over time, we think this is an attractive combination as it provides a nice boost to shareholder returns.

CVB Financial May Find It Hard To Grow The Dividend

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. Growth of 2.8% may indicate that the company has limited investment opportunity so it is returning its earnings to shareholders instead. 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.

We Really Like CVB Financial's Dividend

Overall, we think that this is a great income investment, and we think that maintaining the dividend this year may have been a conservative choice. The earnings easily cover the company's distributions, and the company is generating plenty of cash. 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. Taking this all into consideration, this looks like it could be a good dividend opportunity.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. 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. If you are a dividend investor, you might also want to look at our curated list of high yield dividend stocks.