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Regions Financial Corporation (NYSE:RF) stock is about to trade ex-dividend in 4 days. Investors can purchase shares before the 4th of March in order to be eligible for this dividend, which will be paid on the 1st of April.
Regions Financial’s next dividend payment will be US$0.15 per share. Last year, in total, the company distributed US$0.62 to shareholders. Based on the last year’s worth of payments, Regions Financial has a trailing yield of 3.0% on the current stock price of $20.63. We love seeing companies pay a dividend, but it’s also important to be sure that laying the golden eggs isn’t going to kill our golden goose! As a result, readers should always check whether Regions Financial has been able to grow its dividends, or if the dividend might be cut.
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. Regions Financial is paying out an acceptable 60% of its profit, a common payout level among most companies.
Companies that pay out less in dividends than they earn in profits generally have more sustainable dividends. The lower the payout ratio, the more wiggle room the business has before it could be forced to cut the dividend.
Have Earnings And Dividends Been Growing?
Businesses with strong growth prospects usually make the best dividend payers, because it’s easier to grow dividends when earnings per share are improving. If earnings fall far enough, the company could be forced to cut its dividend. This is why it’s a relief to see Regions Financial earnings per share are up 6.3% per annum 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. Regions Financial has delivered 32% dividend growth per year on average over the past 10 years. We’re glad to see dividends rising alongside earnings over a number of years, which may be a sign the company intends to share the growth with shareholders.
Is Regions Financial worth buying for its dividend? Regions Financial has been generating some growth in earnings per share while paying out more than half of its earnings to shareholders in the form of dividends. At best we would put it on a watch-list to see if business conditions improve, as it doesn’t look like a clear opportunity right now.
If you’re not too concerned about Regions Financial’s ability to pay dividends, you should still be mindful of some of the other risks that this business faces. Case in point: We’ve spotted 2 warning signs for Regions Financial you should be aware of.
A common investment mistake is buying the first interesting stock you see. Here you can find a list of promising dividend stocks with a greater than 2% yield and an upcoming 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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