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Have you been keeping an eye on Trustmark Corporation’s (NASDAQ:TRMK) upcoming dividend of US$0.23 per share payable on the 15 March 2019? Then you only have 4 days left before the stock starts trading ex-dividend on the 28 February 2019. Investors looking for higher income-generating stocks to add to their portfolio should keep reading, as I take a deeper dive into Trustmark’s latest financial data to analyse its dividend attributes.
5 questions I ask before picking a dividend stock
When researching a dividend stock, I always follow the following screening criteria:
- Is its annual yield among the top 25% of dividend-paying companies?
- Does it consistently pay out dividends without missing a payment of significantly cutting payout?
- Has the amount of dividend per share grown over the past?
- Is is able to pay the current rate of dividends from its earnings?
- Will it have the ability to keep paying its dividends going forward?
Does Trustmark pass our checks?
The company currently pays out 42% of its earnings as a dividend, according to its trailing twelve-month data, meaning the dividend is sufficiently covered by earnings. Going forward, analysts expect TRMK’s payout to remain around the same level at 43% of its earnings. Assuming a constant share price, this equates to a dividend yield of 2.7%. In addition to this, EPS is forecasted to fall to $2.2 in the upcoming year.
If you want to dive deeper into the sustainability of a certain payout ratio, you may wish to consider the cash flow of the business. Cash flow is important because companies with strong cash flow can usually sustain higher payout ratios.
If dividend is a key criteria in your investment consideration, then you need to make sure the dividend stock you’re eyeing out is reliable in its payments. TRMK investors will be well aware the dividend payments are lower today than they were 10 years ago, although the payments have at least been steady. Though this may not be a serious red flag, strong dividend stocks should always strive to increase its payout over time.
In terms of its peers, Trustmark has a yield of 2.6%, which is on the low-side for Banks stocks.
Keeping in mind the dividend characteristics above, Trustmark is definitely worth considering for investors looking to build a dedicated income portfolio. Given that this is purely a dividend analysis, I recommend taking sufficient time to understand its core business and determine whether the company and its investment properties suit your overall goals. Below, I’ve compiled three essential factors you should look at:
- Future Outlook: What are well-informed industry analysts predicting for TRMK’s future growth? Take a look at our free research report of analyst consensus for TRMK’s outlook.
- Valuation: What is TRMK worth today? Even if the stock is a cash cow, it’s not worth an infinite price. The intrinsic value infographic in our free research report helps visualize whether TRMK is currently mispriced by the market.
- Other Dividend Rockstars: Are there better dividend payers with stronger fundamentals out there? Check out our free list of these great stocks here.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at email@example.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.