Renasant (NYSE:RNST) Is Due To Pay A 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. Based on this payment, the dividend yield will be 2.9%, which is fairly typical for the industry.

See our latest analysis for Renasant

Renasant's Payment Expected To Have Solid Earnings Coverage

Solid dividend yields are great, but they only really help us if the payment is sustainable.

Having distributed dividends for at least 10 years, Renasant has a long history of paying out a part of its earnings to shareholders. Based on Renasant's last earnings report, the payout ratio is at a decent 30%, meaning that the company is able to pay out its dividend with a bit of room to spare.

EPS is set to fall by 9.3% over the next 3 years. Fortunately, analysts forecast the future payout ratio to be 35% over the same time horizon, which is in the range that makes us comfortable with the sustainability of the dividend.

Renasant Has A Solid Track Record

The company has an extended history of paying stable dividends. The annual payment during the last 10 years was $0.68 in 2013, and the most recent fiscal year payment was $0.88. This means that it has been growing its distributions at 2.6% per annum over that time. Slow and steady dividend growth might not sound that exciting, but dividends have been stable for ten years, which we think makes this a fairly attractive offer.

The Dividend's Growth Prospects Are Limited

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. 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. Earnings growth is slow, but on the plus side, the dividend payout ratio is low and dividends could grow faster than earnings, if the company decides to increase its payout ratio.

We Really Like Renasant's Dividend

Overall, we like to see the dividend staying consistent, and we think Renasant might even raise payments in the future. 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. All of these factors considered, we think this has solid potential as a dividend stock.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. Taking the debate a bit further, we've identified 1 warning sign for Renasant that investors need to be conscious of moving forward. 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.