Cullen/Frost Bankers, Inc.
) raised its common stock dividend by 2.0% to 51 cents per share
on Thursday. The dividend will be paid on Jun 13 to shareholders
of record as of May 30. The dividend hike followed the company's
first-quarter earnings release on Wednesday.
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This San Antonio, TX-based financial services leader has a
history of regularly raising its dividend. In fact, this
Southwest bank continued to hike dividend even amid the financial
crisis of 2008. Notably, the latest hike marks the 20th
consecutive yearly increase in dividend. This consistency in
dividend hike reflects the company's commitment to enhance
shareholders' value with its capital strength. Prior to this,
Cullen/Frost had raised dividend by 4.2% (from 48 cents to 50
cents per share) in May 2013.
The company has an impressive business model, which enables it to
strengthen its balance sheet and efficiently deploy capital. An
improving top line, rise in loans and deposits as well as strong
capital position should enable Cullen/Frost to maintain its
growth momentum. Moreover, we believe that strategic acquisitions
will expand the company's business and improve its profitability
over time. However, continuously rising operating expenses
reflect undisciplined expense management. Additionally, the
company needs to counter the persistent rise in provision for
Furthermore, a tepid economic recovery, low interest-rate
environment and regulatory pressure could limit the company's
At present, Cullen/Frost carries a Zacks Rank #3 (Hold). We
believe that announcement of the dividend hike will boost
Some better-ranked Southwest bank stocks include
BOK Financial Corporation
First Financial Bankshares Inc.
). All these have a Zacks Rank #2 (Buy).