Stock Analysis

SouthState (NASDAQ:SSB) Is Increasing Its Dividend To $0.52

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The board of SouthState Corporation (NASDAQ:SSB) has announced that it will be paying its dividend of $0.52 on the 18th of August, an increased payment from last year's comparable dividend. Despite this raise, the dividend yield of 2.7% is only a modest boost to shareholder returns.

Check out our latest analysis for SouthState

SouthState's Payment Expected To Have Solid Earnings Coverage

If it is predictable over a long period, even low dividend yields can be attractive.

Having distributed dividends for at least 10 years, SouthState has a long history of paying out a part of its earnings to shareholders. Based on SouthState's last earnings report, the payout ratio is at a decent 28%, meaning that the company is able to pay out its dividend with a bit of room to spare.

Looking forward, earnings per share is forecast to fall by 11.2% over the next 3 years. Fortunately, analysts forecast the future payout ratio to be 31% over the same time horizon, which is in the range that makes us comfortable with the sustainability of the dividend.

NasdaqGS:SSB Historic Dividend August 1st 2023

SouthState Has A Solid Track Record

The company has an extended history of paying stable dividends. The dividend has gone from an annual total of $0.72 in 2013 to the most recent total annual payment of $2.08. This works out to be a compound annual growth rate (CAGR) of approximately 11% a year over that time. It is good to see that there has been strong dividend growth, and that there haven't been any cuts for a long time.

The Dividend Looks Likely To Grow

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. We are encouraged to see that SouthState has grown earnings per share at 15% per year over the past five years. SouthState definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

SouthState Looks Like A Great Dividend Stock

Overall, a dividend increase is always good, and we think that SouthState is a strong income stock thanks to its track record and growing earnings. The distributions are easily covered by earnings, and there is plenty of cash being generated as well. However, it is worth noting that the earnings are expected to fall over the next year, which may not change the long term outlook, but could affect the dividend payment in the next 12 months. Taking this all into consideration, this looks like it could be a good dividend opportunity.

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. For example, we've identified 2 warning signs for SouthState (1 makes us a bit uncomfortable!) that you should be aware of before investing. 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.