Pinnacle Financial Partners (NASDAQ:PNFP) Is Due To Pay A Dividend Of $0.22

Pinnacle Financial Partners, Inc. (NASDAQ:PNFP) has announced that it will pay a dividend of $0.22 per share on the 26th of May. The dividend yield is 1.6% based on this payment, which is a little bit low compared to the other companies in the industry.

Check out our latest analysis for Pinnacle Financial Partners

Pinnacle Financial Partners' Earnings Will Easily Cover The Distributions

Even a low dividend yield can be attractive if it is sustained for years on end.

Having paid out dividends for 9 years, Pinnacle Financial Partners has a good history of paying out a part of its earnings to shareholders. Using data from its latest earnings report, Pinnacle Financial Partners' payout ratio sits at 12%, an extremely comfortable number that shows that it can pay its dividend.

Looking forward, earnings per share is forecast to rise by 0.9% over the next year. Assuming the dividend continues along recent trends, we think the future payout ratio could be 13% by next year, which is in a pretty sustainable range.

Pinnacle Financial Partners Doesn't Have A Long Payment History

Even though the company has been paying a consistent dividend for a while, we would like to see a few more years before we feel comfortable relying on it. The dividend has gone from an annual total of $0.32 in 2014 to the most recent total annual payment of $0.88. This works out to be a compound annual growth rate (CAGR) of approximately 12% a year over that time. The dividend has been growing rapidly, however with such a short payment history we can't know for sure if payment can continue to grow over the long term, so caution may be warranted.

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 19% per annum. With a decent amount of growth and a low payout ratio, we think this bodes well for Pinnacle Financial Partners' prospects of growing its dividend payments in the future.

We Really Like Pinnacle Financial Partners' Dividend

In summary, it is good to see that the dividend is staying consistent, and we don't think there is any reason to suspect this might change over the medium term. Earnings are easily covering distributions, and the company is generating plenty of cash. 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. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. To that end, Pinnacle Financial Partners has 2 warning signs (and 1 which shouldn't be ignored) we think you should know about. 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.