First Horizon (NYSE:FHN) Is Paying Out A Dividend Of $0.15

The board of First Horizon Corporation (NYSE:FHN) has announced that it will pay a dividend on the 1st of July, with investors receiving $0.15 per share. This makes the dividend yield 4.1%, which will augment investor returns quite nicely.

View our latest analysis for First Horizon

First Horizon's Earnings Will Easily Cover The Distributions

If the payments aren't sustainable, a high yield for a few years won't matter that much.

First Horizon has established itself as a dividend paying company with over 10 years history of distributing earnings to shareholders. Past distributions do not necessarily guarantee future ones, but First Horizon's payout ratio of 41% is a good sign as this means that earnings decently cover dividends.

The next 3 years are set to see EPS grow by 28.2%. The future payout ratio could be 36% over that time period, according to analyst estimates, which is a good look for the future of the dividend.

First Horizon Has A Solid Track Record

The company has an extended history of paying stable dividends. Since 2014, the annual payment back then was $0.20, compared to the most recent full-year payment of $0.60. This means that it has been growing its distributions at 12% per annum over that time. Rapidly growing dividends for a long time is a very valuable feature for an income stock.

Dividend Growth May Be Hard To Achieve

Investors could be attracted to the stock based on the quality of its payment history. Let's not jump to conclusions as things might not be as good as they appear on the surface. Over the past five years, it looks as though First Horizon's EPS has declined at around 2.9% a year. If the company is making less over time, it naturally follows that it will also have to pay out less in dividends. It's not all bad news though, as the earnings are predicted to rise over the next 12 months - we would just be a bit cautious until this can turn into a longer term trend.

In Summary

Overall, we think First Horizon is a solid choice as a dividend stock, even though the dividend wasn't raised this year. With shrinking earnings, the company may see some issues maintaining the dividend even though they look pretty sustainable for now. The payment isn't stellar, but it could make a decent addition to a dividend portfolio.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. As an example, we've identified 2 warning signs for First Horizon that you should be aware of before investing. Is First Horizon not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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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.