Friday, August 12 2022

CVB Financial Corp. (NASDAQ:CVBF) is set to trade ex-dividend in the next two days. Typically, the ex-dividend date is one business day before the record date which is the date a company determines which shareholders are eligible to receive a dividend. The ex-dividend date is important because the settlement process involves two full business days. So if you miss this date, you will not be on the company’s books as of the record date. So you can buy shares of CVB Financial before June 29 in order to collect the dividend that the company will pay on July 15.

The company’s next dividend payment will be $0.19 per share, and over the past 12 months the company has paid a total of $0.72 per share. Based on last year’s payouts, CVB Financial stock has a yield of about 3.1% on the current share price of $24.76. Dividends are an important source of income for many shareholders, but the health of the company is essential to sustaining those dividends. We therefore need to consider whether CVB Financial can afford its dividend and whether the dividend could increase.

Discover our latest analysis for CVB Financial

If a company pays out more dividends than it has earned, the dividend may become unsustainable – a less than ideal situation. CVB Financial paid out 51% of its profits to investors last year, a normal payout level for most companies.

Generally speaking, the lower a company’s payout ratios, the more resilient its dividend tends to be.

Click here to see the company’s payout ratio, as well as analysts’ estimates of its future dividends.

historical-dividend

Have earnings and dividends increased?

Companies with strong growth prospects are generally the best dividend payers because it is easier to increase dividends when earnings per share improve. If business goes into a recession and the dividend is cut, the company could see its value drop precipitously. That’s why it’s a relief to see that CVB Financial’s earnings per share have grown 7.8% annually over the past five years.

Many investors will gauge a company’s dividend yield by evaluating how much dividend payouts have changed over time. Since our data began 10 years ago, CVB Financial has increased its dividend by around 8.4% per year on average. We are pleased to see dividends rising alongside earnings over several years, which may be a sign that the company intends to share the growth with shareholders.

Last takeaway

Does CVB Financial have what it takes to maintain its dividend payments? Earnings per share have grown at a reasonable pace, and the company is paying just over half of its earnings in the form of dividends. At best, we’d put it on a watchlist to see if trading conditions improve, as it doesn’t seem like a clear opportunity at the moment.

While you aren’t too concerned about CVB Financial’s ability to pay dividends, you should still keep in mind some of the other risks this company faces. In terms of investment risks, we have identified 2 warning signs with CVB Financial and understanding them should be part of your investment process.

A common investment mistake is to buy the first good stock you see. Here you can find a complete list of high yielding dividend stocks.

Feedback on this article? Concerned about content? Get in touch with us directly. You can also email the editorial team (at) Simplywallst.com.

This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts only using unbiased methodology and our articles are not intended to be financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or financial situation. Our goal is to bring you targeted long-term analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price-sensitive companies or qualitative materials. Simply Wall St has no position in the stocks mentioned.

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