Dividend Growth Stock Overview: Cullen/Frost Bankers, Inc.

About Cullen/Frost Bankers

Cullen/Frost Dividend Growth

Cullen/Frost is headquartered in San Antonio and serves customers throughout Texas.
Photo courtesy Anne Swoboda/flickr.com.

Cullen/Frost Bankers, Inc. is a financial holding company and a bank holding company with 116 financial centers across Texas. Cullen/Frost provides various banking and financial services to individuals and businesses across Texas, including personal and business banking, financial advisory services – including Frost-branded mutual funds – and property, casualty and employee benefits insurance. Notably, Cullen/Frost does not offer residential mortgages, having gotten out of the business in 2000 after assessing that home mortgages were effectively commodities. This decision helped the company avoid problems during the recession of 2007 – 2008.

Cullen/Frost has a legacy that dates back to a mercantile partnership that was organized in 1868. In 1899, Frost Bank (which is a wholly owned subsidiary of Cullen/Frost) was chartered as a national banking association. Cullen/Frost has been publicly traded since 1977, starting on the NASDAQ and then switching to the NYSE in 1997. In 2012, the company switched from a national bank charter to a state charter, restricting its operations to Texas.

The company, which as 4000 employees and is one of 24 components of the KBW Bank Index, has grown its banking operations primarily through organic growth. However, in August 2013 Cullen/Frost agreed to merge with WNB Bancshares, Inc. in order to expand into the growing Permian Basin of Texas. This area lies west of Dallas and includes the cities of Midland and Odessa.

At the end of 2013, Frost Bank had consolidated assets of $24.4 billion and total deposits of $20.8 billion. Cullen/Frost’s net income in 2013 was $237.9 million, down less than 1% from 2012; its earnings per share in 2013 were $3.76, down 2.1% from 2012’s EPS of $3.84.

The company is a member of the S&P Mid Cap 400 index and S&P’s High Yield Dividend Aristocrats index, and trades under the ticker symbol CFR.

Cullen/Frost’s Dividend and Stock Split History

Cullen/Frost Dividend Growth

Cullen/Frost Bankers has increased dividends since 1993. The company has grown its dividend at an average rate of 3.5% over the last 5 years.

Cullen/Frost Bankers paid dividends briefly in the mid-1980s, and then resumed dividend payments in 1993. Since then, they have increased dividends annually. Cullen/Frost traditionally announces increases in April, with the stock going ex-dividend in May. In 2014, the company increased the quarterly dividend by 2%, from 50 cents to 51 cents per share. I expect Cullen/Frost to announce their next dividend increase in April 2015.

Cullen/Frost has a history of very modest dividend increases over the last 5 years, resulting in a 5-year compounded annual dividend growth rate (CADGR) of 3.49%. Prior to this however, the company increased dividends at a double-digit percentage rate from 1995 – 2001 and 2004 – 2007, which gives Cullen/Frost a 10-year CADGR of 6.97% and a 20-year CADGR of 13.29%.

Cullen/Frost Bankers has split its stock 3 times since beginning regular dividend payouts in 1993. The company paid a stock dividend of 10% in February 1993 and had two 2-for-1 stock splits in June 1996 and June 1999.

Over the 5 years ending on December 31, 2014, Cullen/Frost stock appreciated at an annualized rate of 10.59%, from $42.71 to $70.64. This trailed both the 13.0% annualized return of the S&P 500 and the 14.9% annualized return of the S&P Mid Cap 400 index during this time.

Cullen/Frost’s Direct Purchase and Dividend Reinvestment Plans

Cullen/Frost does not have either a direct purchase or dividend reinvestment plan. You can purchase Cullen/Frost shares through a brokerage at a nominal fee and most brokerages will allow you to reinvest dividends for the shares you own. Contact your brokerage directly for more information.

Helpful Links

Cullen/Frost Bankers’ Investor Relations Website

Current quote and financial summary for Cullen/Frost Bankers (finviz.com)

Want to find out about more great dividend growth stocks?

Check out the list of current S&P Dividend Aristocrats.

Share this post:

Recent Posts

Comments are closed.