Regions Financial (NYSE:RF) Is Increasing Its Dividend To $0.20

The board of Regions Financial Corporation (NYSE:RF) has announced that it will be paying its dividend of $0.20 on the 3rd of October, an increased payment from last year's comparable dividend. This will take the annual payment to 3.7% of the stock price, which is above what most companies in the industry pay.

Check out our latest analysis for Regions Financial

Regions Financial's Dividend Forecasted To Be Well Covered By Earnings

A big dividend yield for a few years doesn't mean much if it can't be sustained.

Regions Financial has a long history of paying out dividends, with its current track record at a minimum of 10 years. Past distributions do not necessarily guarantee future ones, but Regions Financial's payout ratio of 30% is a good sign as this means that earnings decently cover dividends.

The next 3 years are set to see EPS grow by 16.7%. The future payout ratio could be 37% over that time period, according to analyst estimates, which is a good look for the future of the dividend.

Regions Financial Has A Solid Track Record

The company has an extended history of paying stable dividends. Since 2012, the dividend has gone from $0.04 total annually to $0.80. This works out to be a compound annual growth rate (CAGR) of approximately 35% a year over that time. We can see that payments have shown some very nice upward momentum without faltering, which provides some reassurance that future payments will also be reliable.

The Dividend Looks Likely To Grow

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. We are encouraged to see that Regions Financial has grown earnings per share at 19% per year over the past five years. Regions Financial definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

We Really Like Regions Financial's Dividend

Overall, we think this could be an attractive income stock, and it is only getting better by paying a higher dividend this year. 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.

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. Earnings growth generally bodes well for the future value of company dividend payments. See if the 14 Regions Financial analysts we track are forecasting continued growth with our free report on analyst estimates for the company. Is Regions Financial 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.