Regions Financial Corporation (NYSE:RF) has announced that it will pay a dividend of US$0.15 per share on the 1st of July. Based on this payment, the dividend yield on the company’s stock will be 2.7%, which is an attractive boost to shareholder returns.
View our latest analysis for Regions Financial
Regions Financial’s Payment Has Solid Earnings Coverage
A big dividend yield for a few years doesn’t mean much if it can’t be sustained. Based on the last payment, Regions Financial was quite comfortably earning enough to cover the dividend. This indicates that quite a large proportion of earnings is being invested back into the business.
Looking forward, earnings per share is forecast to rise by 36.1% over the next year. Assuming the dividend continues along recent trends, we think the payout ratio could be 36% by next year, which is in a pretty sustainable range.
NYSE:RF Historic Dividend May 28th 2021
Regions Financial Has A Solid Track Record
The company has been paying a dividend for a long time, and it has been quite stable which gives us confidence in the future dividend potential. Since 2011, the first annual payment was US$0.04, compared to the most recent full-year payment of US$0.62. This means that it has been growing its distributions at 32% per annum over that time. So, dividends have been growing pretty quickly, and even more impressively, they haven’t experienced any notable falls during this period.
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. It’s encouraging to see Regions Financial has been growing its earnings per share at 14% a year over the past five years. Since earnings per share is growing at an acceptable rate, and the payout policy is balanced, we think the company is positioning itself well to grow earnings and dividends in the future.
We Really Like Regions Financial’s Dividend
Overall, we think that this is a great income investment, and we think that maintaining the dividend this year may have been a conservative choice. 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.
Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. However, there are other things to consider for investors when analysing stock performance. Just as an example, we’ve come across 2 warning signs for Regions Financial you should be aware of, and 1 of them shouldn’t be ignored. We have also put together a list of global stocks with a solid dividend.
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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. 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.
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