Pinnacle Financial Partners' (NASDAQ:PNFP) Dividend Will Be $0.22

Pinnacle Financial Partners, Inc.'s (NASDAQ:PNFP) investors are due to receive a payment of $0.22 per share on 24th of February. The dividend yield is 1.2% based on this payment, which is a little bit low compared to the other companies in the industry.

See our latest analysis for Pinnacle Financial Partners

Pinnacle Financial Partners' Earnings Will Easily Cover The Distributions

While yield is important, another factor to consider about a company's dividend is whether the current payout levels are feasible.

Pinnacle Financial Partners has established itself as a dividend paying company, given its 9-year history of distributing earnings to shareholders. While past records don't necessarily translate into future results, the company's payout ratio of 12% also shows that Pinnacle Financial Partners is able to comfortably pay dividends.

Over the next 3 years, EPS is forecast to expand by 17.0%. Analysts estimate the future payout ratio will be 13% over the same time period, which is in the range that makes us comfortable with the sustainability of the dividend.

Pinnacle Financial Partners Doesn't Have A Long Payment History

The dividend's track record has been pretty solid, but with only 9 years of history we want to see a few more years of history before making any solid conclusions. Since 2014, the annual payment back then was $0.32, compared to the most recent full-year payment of $0.88. This means that it has been growing its distributions at 12% per annum over that time. Pinnacle Financial Partners has been growing its dividend quite rapidly, which is exciting. However, the short payment history makes us question whether this performance will persist across a full market cycle.

The Dividend Looks Likely To Grow

Investors could be attracted to the stock based on the quality of its payment history. Pinnacle Financial Partners has seen EPS rising for the last five years, at 21% per annum. Earnings per share is growing at a solid clip, and the payout ratio is low which we think is an ideal combination in a dividend stock as the company can quite easily raise the dividend in the future.

We Really Like Pinnacle Financial Partners' 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. The company is easily earning enough to cover its dividend payments and it is great to see that these earnings are being translated into cash flow. All of these factors considered, we think this has solid potential as a dividend stock.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. Taking the debate a bit further, we've identified 1 warning sign for Pinnacle Financial Partners that investors need to be conscious of moving forward. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.