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Shares of South State Corporation (NASDAQ:SSB) will begin trading ex-dividend in 4 days. To qualify for the dividend check of US$0.38 per share, investors must have owned the shares prior to 14 February 2019, which is the last day the company’s management will finalize their list of shareholders to which they will send dividend payments. Is this future income stream a compelling catalyst for dividend investors to think about the stock as an investment today? Let’s take a look at South State’s most recent financial data to examine its dividend characteristics in more detail.
5 checks you should use to assess a dividend stock
If you are a dividend investor, you should always assess these five key metrics:
- Is its annual yield among the top 25% of dividend-paying companies?
- Has its dividend been stable over the past (i.e. no missed payments or significant payout cuts)?
- Has the amount of dividend per share grown over the past?
- Can it afford to pay the current rate of dividends from its earnings?
- Based on future earnings growth, will it be able to continue to payout dividend at the current rate?
How does South State fare?
South State has a trailing twelve-month payout ratio of 28%, meaning the dividend is sufficiently covered by earnings. Going forward, analysts expect SSB’s payout to remain around the same level at 28% of its earnings. Assuming a constant share price, this equates to a dividend yield of 2.4%. In addition to this, EPS should increase to $5.39.
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 there is one thing that you want to be reliable in your life, it’s dividend stocks and their constant income stream. In the case of SSB it has increased its DPS from $0.68 to $1.52 in the past 10 years. During this period it has not missed a payment, as one would expect for a company increasing its dividend. These are all positive signs of a great, reliable dividend stock.
Compared to its peers, South State produces a yield of 2.3%, which is on the low-side for Banks stocks.
With this in mind, I definitely rank South State as a strong dividend stock, and makes it worth further research for anyone who likes steady income generation from their 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. I’ve put together three relevant aspects you should further research:
- Future Outlook: What are well-informed industry analysts predicting for SSB’s future growth? Take a look at our free research report of analyst consensus for SSB’s outlook.
- Valuation: What is SSB 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 SSB 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.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at firstname.lastname@example.org.