Regions Financial Corporation's (NYSE:RF) dividend will be increasing from last year's payment of the same period to $0.20 on 3rd of October. The payment will take the dividend yield to 3.6%, which is in line with the average for the industry.
Regions Financial's Dividend Forecasted To Be Well Covered By Earnings
We like a dividend to be consistent over the long term, so checking whether it is sustainable is important.
Regions Financial has established itself as a dividend paying company with over 10 years history of distributing earnings to shareholders. Taking data from its last earnings report, calculating for the company's payout ratio shows 30%, which means that Regions Financial would be able to pay its last dividend without pressure on the balance sheet.
Looking forward, EPS is forecast to rise by 15.5% over the next 3 years. The future payout ratio could be 39% over that time period, according to analyst estimates, which is a good look for the future of the dividend.
Regions Financial Has A Solid Track Record
Even over a long history of paying dividends, the company's distributions have been remarkably stable. The annual payment during the last 10 years was $0.04 in 2012, and the most recent fiscal year payment was $0.80. This implies that the company grew its distributions at a yearly rate of about 35% over that duration. It is good to see that there has been strong dividend growth, and that there haven't been any cuts for a long time.
The Dividend Looks Likely To Grow
Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. We are encouraged to see that Regions Financial has grown earnings per share at 19% per year over the past five years. Regions Financial definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.
Regions Financial Looks Like A Great Dividend Stock
Overall, a dividend increase is always good, and we think that Regions Financial is a strong income stock thanks to its track record and growing earnings. Distributions are quite easily covered by earnings, which are also being converted to cash flows. All in all, this checks a lot of the boxes we look for when choosing an income stock.
Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. Earnings growth generally bodes well for the future value of company dividend payments. See if the 17 Regions Financial analysts we track are forecasting continued growth with our free report on analyst estimates for the company. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
Join A Paid User Research Session
You’ll receive a US$30 Amazon Gift card for 1 hour of your time while helping us build better investing tools for the individual investors like yourself. Sign up here