Some investors rely on dividends for growing their wealth, and if you're one of those dividend sleuths, you might be intrigued to know that Pinnacle Financial Partners, Inc. (NASDAQ:PNFP) is about to go ex-dividend in just 2 days. Investors can purchase shares before the 4th of February in order to be eligible for this dividend, which will be paid on the 26th of February.

Pinnacle Financial Partners's next dividend payment will be US$0.18 per share, and in the last 12 months, the company paid a total of US$0.72 per share. Calculating the last year's worth of payments shows that Pinnacle Financial Partners has a trailing yield of 1.1% on the current share price of $68.53. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. As a result, readers should always check whether Pinnacle Financial Partners has been able to grow its dividends, or if the dividend might be cut.

View our latest analysis for Pinnacle Financial Partners

Dividends are usually paid out of company profits, so if a company pays out more than it earned then its dividend is usually at greater risk of being cut. Pinnacle Financial Partners paid out just 16% of its profit last year, which we think is conservatively low and leaves plenty of margin for unexpected circumstances.

Generally speaking, the lower a company's payout ratios, the more resilient its dividend usually is.

Click here to see the company's payout ratio, plus analyst estimates of its future dividends.

Have Earnings And Dividends Been Growing?

Companies with consistently growing earnings per share generally make the best dividend stocks, as they usually find it easier to grow dividends per share. If earnings fall far enough, the company could be forced to cut its dividend. With that in mind, we're encouraged by the steady growth at Pinnacle Financial Partners, with earnings per share up 9.4% on average over the last five years.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. Pinnacle Financial Partners has delivered an average of 12% per year annual increase in its dividend, based on the past seven years of dividend payments. It's encouraging to see the company lifting dividends while earnings are growing, suggesting at least some corporate interest in rewarding shareholders.

The Bottom Line

Is Pinnacle Financial Partners worth buying for its dividend? It has been growing its earnings per share somewhat in recent years, although it reinvests more than half its earnings in the business, which could suggest there are some growth projects that have not yet reached fruition. In summary, Pinnacle Financial Partners appears to have some promise as a dividend stock, and we'd suggest taking a closer look at it.