Renasant (NASDAQ:RNST) Is Paying Out A Dividend Of $0.22

The board of Renasant Corporation (NASDAQ:RNST) has announced that it will pay a dividend on the 29th of September, with investors receiving $0.22 per share. Based on this payment, the dividend yield will be 2.9%, which is fairly typical for the industry.

View our latest analysis for Renasant

Renasant's Payment Expected To Have Solid Earnings Coverage

Solid dividend yields are great, but they only really help us if the payment is sustainable.

Renasant 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 29%, which means that Renasant would be able to pay its last dividend without pressure on the balance sheet.

EPS is set to fall by 5.6% over the next 12 months. But assuming the dividend continues along recent trends, we believe the future payout ratio could be 32%, which we are pretty comfortable with and we think would be feasible on an earnings basis.

Renasant Has A Solid Track Record

The company has been paying a dividend for a long time, and it has been quite stable which gives us confidence in the future dividend potential. Since 2013, the dividend has gone from $0.68 total annually to $0.88. This works out to be a compound annual growth rate (CAGR) of approximately 2.6% a year over that time. Although we can't deny that the dividend has been remarkably stable in the past, the growth has been pretty muted.

The Dividend Has Growth Potential

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 Renasant has been growing its earnings per share at 5.4% a year over the past five years. Growth in EPS bodes well for the dividend, as does the low payout ratio that the company is currently reporting.

We Really Like Renasant's Dividend

Overall, we like to see the dividend staying consistent, and we think Renasant might even raise payments in the future. The company is generating plenty of cash, and the earnings also quite easily cover the distributions. We should point out that the earnings are expected to fall over the next 12 months, which won't be a problem if this doesn't become a trend, but could cause some turbulence in the next year. All in all, this checks a lot of the boxes we look for when choosing an income stock.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. 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 Renasant 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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