Renasant (NYSE:RNST) Has Announced A Dividend Of $0.22

Renasant Corporation (NYSE:RNST) has announced that it will pay a dividend of $0.22 per share on the 30th of September. Based on this payment, the dividend yield will be 2.7%, which is fairly typical for the industry.

See our latest analysis for Renasant

Renasant's Dividend Forecasted To Be Well Covered By Earnings

We like a dividend to be consistent over the long term, so checking whether it is sustainable is important.

Having distributed dividends for at least 10 years, Renasant has a long history of paying out a part of its earnings to shareholders. Past distributions do not necessarily guarantee future ones, but Renasant's payout ratio of 33% is a good sign as this means that earnings decently cover dividends.

The next 3 years are set to see EPS grow by 34.1%. Analysts forecast the future payout ratio could be 31% over the same time horizon, which is a number we think the company can maintain.

Renasant Has A Solid Track Record

The company has an extended history of paying stable dividends. Since 2014, the annual payment back then was $0.68, compared to the most recent full-year payment of $0.88. This works out to be a compound annual growth rate (CAGR) of approximately 2.6% a year over that time. While the consistency in the dividend payments is impressive, we think the relatively slow rate of growth is less attractive.

Renasant May Find It Hard To Grow The Dividend

The company's investors will be pleased to have been receiving dividend income for some time. Let's not jump to conclusions as things might not be as good as they appear on the surface. Renasant has seen earnings per share falling at 4.6% per year over the last five years. 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.

An additional note is that the company has been raising capital by issuing stock equal to 13% of shares outstanding in the last 12 months. Regularly doing this can be detrimental - it's hard to grow dividends per share when new shares are regularly being created.

Our Thoughts On Renasant's Dividend

Overall, we think Renasant is a solid choice as a dividend stock, even though the dividend wasn't raised this year. While the payments look sustainable for now, earnings have been shrinking so the dividend could come under pressure in the future. Taking all of this into consideration, the dividend looks viable moving forward, but investors should be mindful that the company has pushed the boundaries of sustainability in the past and may do so again.

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 1 warning sign for Renasant 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.