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Regions Financial Corporation (NYSE:RF) will increase its dividend from last year's comparable payment on the 3rd of October to $0.20. This will take the dividend yield to an attractive 3.7%, providing a nice boost to shareholder returns.
See our latest analysis for Regions Financial
Regions Financial's Earnings Will Easily Cover The Distributions
We like to see robust dividend yields, but that doesn't matter if the payment isn't sustainable.
Regions Financial has a long history of paying out dividends, with its current track record at a minimum of 10 years. 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 16.7% over the next 3 years. Analysts estimate the future payout ratio will be 37% over the same time period, which is in the range that makes us comfortable with the sustainability of the dividend.
Regions Financial Has A Solid Track Record
The company has an extended history of paying stable dividends. Since 2012, the annual payment back then was $0.04, compared to the most recent full-year payment of $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
Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. It's encouraging to see that Regions Financial has been growing its earnings per share at 19% a 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.
We Really Like Regions Financial's Dividend
In summary, it is always positive to see the dividend being increased, and we are particularly pleased with its overall sustainability. Distributions are quite easily covered by earnings, which are also being converted to cash flows. Taking this all into consideration, this looks like it could be a good dividend opportunity.
Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. Companies that are growing earnings tend to be the best dividend stocks over the long term. See what the 14 analysts we track are forecasting for Regions Financial for free with public analyst estimates for the company. Is Regions Financial not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.