Key Takeaways
💰 Dividend yield of 2.78% with a raised quarterly dividend of $1.00 per share and a comfortable payout ratio of 39.82%.
💵 Operating cash flow of $273.98 million supports the dividend with a conservative and well-covered payout structure.
📉 Analyst consensus sits at a cautious “Hold,” though the mean price target of $144.87 sits modestly above the current price.
📊 Full-year EPS reached $9.92 with net income of $635.47 million, reflecting continued earnings momentum.
👔 Experienced management led by CEO Phil Green maintains the bank’s conservative growth philosophy across Texas markets.
Updated 2/25/26
Cullen/Frost Bankers (CFR), based in San Antonio, has built a reputation on conservative growth, strong capital discipline, and a focus on relationship-based banking across Texas. With a dividend yield approaching 2.78% and a payout ratio just under 40%, it continues to appeal to income-focused investors seeking consistency in a regional banking franchise with real staying power.
The company has raised its quarterly dividend to $1.00 per share, up from $0.95, marking another step in its steady progression of income growth. Management, led by CEO Phil Green, has continued to emphasize long-term strategic expansion into high-growth Texas markets while maintaining the conservative credit culture that defines the institution. With shares trading near their 52-week high and earnings per share climbing to $9.92, CFR enters 2026 with solid fundamentals and a clear path for continued dividend strength.
Recent Events
Cullen/Frost Bankers has been an active story heading into early 2026. The bank raised its quarterly dividend to $1.00 per share beginning with the May 2025 payment, an increase from the prior rate of $0.95, signaling management’s confidence in the earnings trajectory and capital position. That step up brought the annualized dividend to $4.00, and with CFR shares trading near $143, the bank is delivering steady income growth to shareholders who have held through the recent rate cycle.
The broader operating environment for Texas-focused regional banks has remained constructive. Loan demand across the state’s major metropolitan areas, including Austin, Dallas, Houston, and San Antonio, has stayed resilient, and Cullen/Frost’s relationship banking model continues to attract commercial and consumer deposits in a competitive landscape. The bank’s return on equity improved to 15.31% and return on assets rose to 1.23%, both reflecting a cleaner earnings environment compared to prior periods that were weighed down by one-time charges.
Full-year net income came in at $635.47 million, translating to earnings per share of $9.92, which represents meaningful improvement from the $575.9 million and $8.87 per share reported for fiscal 2024. Revenue reached $2.19 billion over the trailing twelve months, and the profit margin of 29.60% points to continued efficiency in how the bank converts its top-line growth into bottom-line results. Shares have climbed to $143.06, sitting near the upper end of the 52-week range of $100.31 to $148.97, reflecting improving sentiment toward well-run regional banks with clean balance sheets.
Key Dividend Metrics
📈 Forward Dividend Yield: 2.78%
💰 Forward Annual Dividend Rate: $4.00 per share
🔒 Payout Ratio: 39.82%
🌿 5-Year Average Dividend Yield: 2.99%
📅 Most Recent Dividend Payment: $1.00 per share (November 28, 2025)
🧾 Last Dividend Increase: From $0.95 to $1.00 per share (May 2025)
Dividend Overview
Cullen/Frost’s dividend profile is built around reliability and gradual improvement, and the numbers behind it continue to support that reputation. With a forward yield of 2.78% on an annualized rate of $4.00 per share, the bank is offering a steady income stream without stretching its financial resources to do so. The payout ratio of 39.82% sits well within conservative territory for a regional bank, leaving ample room to sustain and grow the dividend even if earnings soften in a less favorable rate environment.
The dividend is backed by genuine operating profitability rather than financial engineering. Net income of $635.47 million and earnings per share of $9.92 give the $4.00 annualized dividend a wide margin of safety, with earnings covering the payout by more than two and a half times. Cullen/Frost’s fortress balance sheet and conservative lending standards further reinforce the durability of the income stream for long-term shareholders.
The stock’s beta of 0.62 reflects a lower-volatility profile relative to the broader market, which is a meaningful attribute for income investors who prioritize a smoother total return experience. While the current yield of 2.78% sits slightly below the bank’s five-year average yield of 2.99%, that compression is a direct function of the stock’s strong price appreciation over the past year rather than any deterioration in the underlying payout.
Dividend Growth and Safety
The recent dividend history for Cullen/Frost illustrates a deliberate and consistent growth pattern. The quarterly payment stepped up from $0.87 in early 2023 to $0.92 later that year, then to $0.95 in the second half of 2024, and most recently to $1.00 beginning in May 2025. That trajectory represents a cumulative increase of approximately 15% over roughly two and a half years, a pace that comfortably outpaces inflation without straining the bank’s earnings capacity.
The payout ratio of 39.82% is one of the more reassuring data points in this profile. With earnings per share at $9.92 and the annual dividend at $4.00, Cullen/Frost is retaining the majority of its earnings for reinvestment, capital building, and balance sheet flexibility. That cushion is particularly valuable heading into a period of uncertainty around Federal Reserve rate policy, where net interest margin dynamics could influence profitability in either direction.
The balance sheet discipline that management has consistently demonstrated adds another layer of confidence to the dividend’s safety. Cullen/Frost has historically carried more cash than debt, giving the bank optionality to maintain its payout through softer periods without needing to tap capital markets or restructure its financial commitments. For dividend growth investors who value predictability over excitement, this bank’s approach to capital allocation remains a genuine differentiator among regional peers.
Chart Analysis
Cullen/Frost Bankers has staged an impressive recovery over the past year, climbing from a 52-week low of $103.34 to its current price of $142.98, a gain of roughly 38% from the trough. That kind of price appreciation in a regional bank reflects a meaningful shift in investor sentiment, likely driven by improving net interest margin expectations and the company’s consistent execution on its organic growth strategy. At just 2.8% below the 52-week high of $147.10, CFR is trading near the top of its annual range, which signals genuine underlying demand for the shares rather than a speculative spike.
The moving average picture is constructive. CFR is trading above both its 50-day moving average of $137.06 and its 200-day moving average of $128.80, and the 50-day has crossed above the 200-day to form a golden cross, a configuration that technical analysts broadly interpret as confirmation of a sustained uptrend. The spread between the current price and the 200-day average is roughly $14, or about 11%, which suggests the longer-term trend has meaningful momentum behind it without yet appearing dangerously extended. For dividend investors who are sensitive to entry price, the 50-day average near $137 represents a reasonable area to watch for potential pullbacks.
The current RSI reading of 52.18 sits in neutral territory, comfortably between the oversold threshold of 30 and the overbought threshold of 70. This is actually an encouraging setup for income-focused buyers. It indicates that recent price strength has not been accompanied by the kind of excessive enthusiasm that tends to precede sharp corrections. The stock is moving higher on measured buying rather than a momentum rush, which tends to produce more durable price levels over time.
For dividend investors, the technical backdrop here is about as clean as it gets for a financial sector name. The trend is up, momentum is controlled, and the price is near multi-year highs without showing signs of exhaustion. Investors initiating or adding to a position in CFR are not chasing a parabolic move, they are stepping into a stock that has rebuilt its technical foundation over the past year and is now trading with the kind of quiet confidence that tends to support reliable income compounding. The area around the 50-day moving average would represent a more favorable entry point on any near-term softness.
Cash Flow Statement
Cullen/Frost Bankers generated $989.5 million in operating cash flow in 2024, a significant acceleration from the $478.8 million posted in 2023 and well above the $722.6 million recorded in 2022. Free cash flow followed the same trajectory, reaching $861.8 million in 2024 after compressing to $320.2 million the prior year. The 2025 figures reflect only a partial period, with operating cash flow at $274.0 million year to date, which makes direct annual comparisons premature. What matters for dividend sustainability is that the underlying cash generation engine demonstrated in 2024 was genuinely robust, and the annual dividend obligation for a bank of CFR’s size sits well within the free cash flow capacity the company has shown it can produce in a normalized operating environment.
Stepping back across the full range of data, the 2023 dip in both operating and free cash flow stands out as the anomaly rather than the trend, likely reflecting the elevated deposit repricing pressures and balance sheet repositioning that challenged regional banks broadly during that period. The recovery to $861.8 million in free cash flow during 2024 confirmed that CFR’s capital efficiency remains intact, with free cash flow conversion running at approximately 87% of operating cash flow that year. That conversion rate signals disciplined capital expenditure management, which is exactly what income investors want to see from a bank allocating capital between organic growth, acquisitions, and returning cash to shareholders through dividends and buybacks. The partial 2025 data does not raise concerns on its own, and investors should monitor the full-year trajectory as the interest rate environment continues to evolve.
Analyst Ratings
The analyst community maintains a cautious stance on Cullen/Frost Bankers heading into early 2026, with the consensus rating sitting at Hold across a coverage group of 15 analysts. The mean price target of $144.87 implies only modest upside from the current price of $143.06, suggesting that most analysts view the stock as fairly valued at current levels following its strong run from the $100 range earlier in the 52-week period. The range of targets is wide, however, spanning from a low of $110.00 to a high of $163.00, indicating a meaningful spread of opinion on how the bank’s earnings trajectory and rate environment will play out over the next year.
The bears in the group point to net interest margin sensitivity as the key risk, particularly if the Federal Reserve moves toward rate cuts that compress the bank’s spread income. At a price-to-earnings ratio of 14.42 and a price-to-book of 2.04, CFR is not cheap by historical regional bank standards, which gives analysts with more cautious outlooks reason to keep their targets near current trading levels. The bulls, meanwhile, see the bank’s clean credit quality, Texas market exposure, and continued loan growth as drivers that could push the stock toward the higher end of the target range if the macro environment cooperates. For dividend investors, the Hold consensus is less of a warning and more of a reflection that the upside from price appreciation alone may be limited near term, even as the income story remains intact.
Earnings Report Summary
Cullen/Frost Bankers closed out fiscal 2025 with another year of meaningful earnings improvement, demonstrating that the bank’s steady Texas-focused strategy continues to generate real results. Full-year net income reached $635.47 million, or $9.92 per diluted share, a notable step up from the $575.9 million and $8.87 per share reported for fiscal 2024. Revenue for the trailing twelve months came in at $2.19 billion, and the profit margin of 29.60% reflects disciplined expense management alongside solid top-line performance.
Strong Loan and Deposit Growth
The earnings improvement was supported by continued strength in Cullen/Frost’s core lending and deposit-gathering activities. The bank’s expansion into high-growth Texas markets, including Austin, Dallas, and Houston, has continued to add productive earning assets to the balance sheet. Net interest income has benefitted from the elevated rate environment, and the bank’s commercial banking relationships have provided a steady pipeline of credit demand. Deposit levels have remained stable, reflecting the loyalty-based model that Cullen/Frost has cultivated over decades of relationship banking in Texas communities.
Full-Year Performance Holds Steady
Return on equity reached 15.31% for the trailing period, up from the 15.30% reported previously, while return on assets improved to 1.23% from 1.13%. These metrics place Cullen/Frost among the stronger performers in the regional banking segment and reflect the compounding benefit of years of disciplined credit underwriting and conservative balance sheet management. The profit margin of 29.60% demonstrates that the bank is converting revenue into earnings efficiently, even as it continues to invest in technology and branch infrastructure to support its long-term growth agenda.
Leadership Comments and Future Outlook
Chairman and CEO Phil Green has consistently framed the bank’s performance within the context of its long-term investment in Texas markets, and the fiscal 2025 results validate that patience. The board’s decision to raise the quarterly dividend to $1.00 per share reflects management’s confidence in the sustainability of the current earnings level and the bank’s capital generation capacity. With a Common Equity Tier 1 ratio that has historically been well above regulatory minimums, Cullen/Frost enters 2026 with the financial flexibility to support continued dividend growth, opportunistic balance sheet expansion, and potential buyback activity. CFO Dan Geddes has previously noted that Federal Reserve rate decisions remain the most significant external variable for net interest income, and that dynamic will continue to shape the earnings narrative in the quarters ahead.
Management Team
Cullen/Frost Bankers is led by a group of seasoned executives who have guided the company with consistency and a measured hand. Phil Green, who serves as Chairman and CEO, has been with the bank since 1980 and brings decades of institutional knowledge to every strategic decision. Under his leadership, the bank has maintained a conservative credit culture and built out its branch footprint across Texas, particularly in high-growth metro areas like Austin and Dallas, without sacrificing the relationship-first approach that defines the Frost brand.
Green is known for his emphasis on long-term growth over short-term gains, and that mindset filters through the rest of the leadership team. CFO Jerry Salinas, who joined Cullen/Frost in the mid-1980s, provides stability on the financial side. He has overseen the company’s disciplined capital allocation and guided it through both expansion cycles and downturns with the same conservative lens. The broader management team reflects the same stability — turnover is low, and leadership tends to rise internally, fostering a deep understanding of the bank’s culture and strategic priorities.
Cullen/Frost has also made technology investment a core part of its longer-term vision, with executives focused on digital transformation that complements rather than replaces the customer-first experience that has long defined the brand. In an industry where management missteps can quickly become costly, this team’s steady and deliberate approach remains a genuine competitive strength for shareholders who value predictability in leadership as much as in dividends.
Valuation and Stock Performance
CFR shares are trading at $143.06 as of February 25, 2026, sitting near the top of the 52-week range of $100.31 to $148.97. The stock has made a substantial move over the past year, recovering from the low triple digits to approach its all-time highs, and that appreciation is reflected in valuation metrics that are no longer deeply discounted. The trailing price-to-earnings ratio of 14.42 is reasonable for a high-quality regional bank generating returns on equity above 15%, and the price-to-book ratio of 2.04 against a book value per share of $69.96 reflects the market’s recognition of the franchise’s earnings power and capital discipline.
The stock’s beta of 0.62 means that CFR has historically moved less than the broader market, which is a meaningful attribute in a volatile tape. For income investors, the combination of below-market volatility and a 2.78% yield provides a more stable total return experience than many equity alternatives. The mean analyst price target of $144.87 implies only marginal upside from current levels, suggesting the stock is fairly priced rather than offering a significant margin of safety on price alone.
From a dividend yield perspective, the current 2.78% sits modestly below the five-year average yield of 2.99%, which is the natural result of strong price appreciation compressing the yield. Investors entering at current prices are accepting a slightly lower starting yield than historical buyers, but they are doing so in exchange for a bank that is generating more earnings, carrying a more favorable payout ratio, and paying a higher absolute dividend per share than at most points in that five-year history.
Risks and Considerations
Cullen/Frost’s earnings are meaningfully tied to net interest income, which means that any sustained Federal Reserve rate cutting cycle could compress margins and weigh on profitability. The bank has benefitted from the elevated rate environment of recent years, and a normalization of rates downward would reduce the spread between what the bank earns on loans and what it pays on deposits. Management has navigated prior rate cycles with discipline, but this remains the single most significant variable for near-term earnings forecasts.
Deposit competition across Texas and the broader banking industry continues to intensify. Higher-yielding alternatives, including money market funds and online savings accounts, have raised the cost of keeping deposits within the traditional banking system. Cullen/Frost’s relationship model has historically insulated it from the worst of this pressure, but any acceleration in deposit outflows or cost of funds increases could reduce the profitability of its lending activity and limit balance sheet growth.
Geographic concentration in Texas is both a strength and a source of risk. The state’s economy has been a relative outperformer, but it is not immune to cyclical downturns, energy price volatility, or commercial real estate pressures. A meaningful slowdown in Texas economic activity would have a disproportionate effect on Cullen/Frost compared to more nationally diversified banking franchises, and any deterioration in the commercial loan portfolio could quickly become visible in credit costs.
The bank’s ongoing investment in branch expansion and technology infrastructure carries execution risk. While these investments are necessary for long-term competitiveness, they add to the expense base in the near term and require sustained revenue growth to justify. If loan demand softens while these cost investments continue, the efficiency ratio could move in an unfavorable direction and pressure the pace of future dividend increases.
Finally, with shares trading near the top of their 52-week range and analyst consensus sitting at Hold, the stock’s near-term upside from price appreciation alone appears limited. Regional bank stocks as a group remain sensitive to headline risk around credit quality, regulatory changes, and macroeconomic sentiment, any of which could create volatility that tests investor patience even when the underlying fundamentals of the specific institution remain sound.
Final Thoughts
Cullen/Frost Bankers sits in a category of its own — a regional player with the strength, consistency, and leadership typically associated with much larger institutions. The bank’s conservative approach, deep Texas roots, and disciplined expansion strategy have allowed it to grow steadily without overreaching, and the fiscal 2025 results confirm that this model continues to generate improving financial outcomes for shareholders.
The dividend raise to $1.00 per quarter is the most tangible signal that management views the current earnings level as durable. With a payout ratio below 40%, EPS of $9.92, and a return on equity above 15%, the foundation beneath that $4.00 annualized dividend is as solid as it has been in years. Income investors who have held CFR through the rate cycle volatility have been rewarded with both price appreciation and a growing income stream.
As with any investment in the financial sector, risks are present and should not be dismissed. Interest rate sensitivity, deposit competition, and regional economic concentration are all legitimate considerations that belong in any honest assessment of the stock. But Cullen/Frost has navigated past cycles by staying true to its core strengths: responsible lending, tight expense control, and a strong customer-first culture that has earned real loyalty across Texas.
The stock’s proximity to its 52-week high means that new investors are not picking this up at a discount, and the modest upside implied by consensus price targets reflects that fair valuation. For long-term dividend growth investors, however, the story here is less about near-term price catalysts and more about owning a well-run institution that raises its dividend consistently, covers that dividend comfortably with earnings, and manages through cycles with the kind of discipline that compounds favorably over time. Cullen/Frost may not be the flashiest name in the space, but its approach continues to deliver where it counts.