Prosperity Bancshares Raises Quarterly Dividend 6.7% to $0.64

Prosperity Bancshares, Inc. raised its quarterly dividend 6.7% to $0.64 per share from $0.60. PB shares are scheduled to trade ex-dividend on December 15, 2026, and the payment is due January 4, 2027, lifting the annual dividend to $2.56 per share.

Why the dividend changed

The board approved the higher fourth-quarter payment without giving a specific explanation for the decision. The declaration release stated the new rate, payment timing and increase but did not tie the action to a particular earnings, capital or balance-sheet target.

The operating backdrop nevertheless shows stronger earnings and continued capital returns. Prosperity reported second-quarter net income of $168.6 million and diluted earnings per share of $1.67, up from $135.2 million and $1.42 a year earlier. Its net interest margin increased to 3.47%, while nonperforming assets remained at 0.34% of average interest-earning assets. The bank also repurchased 200 thousand shares during the quarter and 1.0 million shares during 2026, according to its second-quarter earnings release filed with the SEC.

Acquisitions also expanded the business before the dividend increase. Prosperity completed its combinations with American Bank Holding Corporation and Southwest Bancshares early in 2026, then closed the Stellar Bancorp acquisition on July 1. Management said assets exceeded $53 billion after giving effect to Stellar, compared with $38 billion a year earlier. The Stellar filing shows that the deal added a substantial Texas banking franchise. The company did not say that these transactions caused the dividend increase, but their integration is now central to earnings and capital management.

Dividend track record

The increase extends Prosperity’s dividend-growth streak to 26 consecutive years. The payment record shows a deliberate annual step-up rather than frequent adjustments: the quarterly rate was $0.58 for the ex-dividend dates from December 13, 2024, through September 15, 2025, then rose to $0.60 for the next four payments before the latest increase to $0.64.

Full-year payments increased from $1.87 per share in 2020 to $2.34 in 2025. Growth was 6.4% in 2021 and 6.0% in 2022, slowed to 4.7% in 2023 and 2.3% in 2024, then accelerated to 3.5% in 2025. The five-year rate is 4.7% annual growth. The latest 6.7% quarterly-rate increase is therefore larger than the recent annual growth pace.

The record also shows continuity through a period of rapid acquisition activity. Prosperity maintained four quarterly payments in each full year from 2020 through 2025, with each annual total exceeding the previous year’s amount.

Is the dividend covered?

The dividend consumes 41% of earnings. That leaves a majority of reported profit available for loan growth, acquisition integration, balance-sheet support, repurchases and other corporate purposes after the common dividend.

SmarterDividends rates the dividend A, with a safety score of 94. That falls in the very safe range of 80-100 and indicates strong coverage based on the earnings payout and broader financial profile. The grade does not make future payments certain, because bank dividends remain subject to earnings, credit quality, capital requirements and board approval.

The latest reported credit measures support that assessment. Prosperity’s second-quarter allowance for credit losses on loans and off-balance-sheet exposure was $420.5 million, while nonperforming assets remained low. Its June 2026 Form 10-Q also details the larger loan portfolio and acquisition-related balance-sheet changes that management must support with capital.

Yield and valuation

At a share price of $69.74, the annual dividend of $2.56 produces a 3.67% forward yield. That is below the Financial Services sector median forward yield of 5.84%. The higher rate increases annual income from 100 shares to $256.00.

SmarterDividends’ fair-value estimate is $63.66, carrying a fair valuation verdict. Against the stated share price, that represents 8% downside to fair value. The yield comparison and valuation assessment measure different things: the former describes current dividend income, while the latter compares the share price with an estimated underlying value.

What to watch

The next scheduled milestones are the third-quarter earnings report, the December 15, 2026, ex-dividend date and the January 4, 2027, payment. Prosperity’s investor-relations release calendar scheduled third-quarter results and a management conference call for October 28, 2026.

Those results will provide the first full-quarter operating view after the Stellar transaction closed. Investors can track the integration of Stellar, American Bank and Texas Partners, changes in net interest margin and credit quality, and whether earnings continue to cover the $0.64 quarterly dividend at the current 41% earnings payout ratio.