Renasant (NYSE:RNST) Has Affirmed Its Dividend Of $0.22

The board of Renasant Corporation (NYSE:RNST) has announced that it will pay a dividend on the 1st of January, with investors receiving $0.22 per share. This payment means that the dividend yield will be 3.2%, which is around the industry average.

Check out our latest analysis for Renasant

Renasant's Payment Expected To Have Solid Earnings Coverage

Unless the payments are sustainable, the dividend yield doesn't mean too much.

Having distributed dividends for at least 10 years, Renasant has a long history of paying out a part of its earnings to shareholders. Taking data from its last earnings report, calculating for the company's payout ratio shows 30%, which means that Renasant would be able to pay its last dividend without pressure on the balance sheet.

Over the next 3 years, EPS is forecast to fall by 12.3%. Despite that, analysts estimate the future payout ratio could be 36% over the same time period, which is in a pretty comfortable range.

Renasant Has A Solid Track Record

The company has a sustained record of paying dividends with very little fluctuation. The annual payment during the last 10 years was $0.68 in 2013, and the most recent fiscal year payment was $0.88. This implies that the company grew its distributions at a yearly rate of about 2.6% over that duration. Although we can't deny that the dividend has been remarkably stable in the past, the growth has been pretty muted.

The Dividend's Growth Prospects Are Limited

Investors could be attracted to the stock based on the quality of its payment history. Earnings have grown at around 4.1% a year for the past five years, which isn't massive but still better than seeing them shrink. While EPS growth is quite low, Renasant has the option to increase the payout ratio to return more cash to shareholders.

We Really Like Renasant's 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. The company is generating plenty of cash, and the earnings also quite easily cover the distributions. 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. All in all, this checks a lot of the boxes we look for when choosing an income stock.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. However, there are other things to consider for investors when analysing stock performance. For example, we've picked out 1 warning sign for Renasant that investors should know about before committing capital to this stock. Is Renasant 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.