Renasant's (NYSE:RNST) Dividend Will Be $0.22

The board of Renasant Corporation (NYSE:RNST) has announced that it will pay a dividend of $0.22 per share on the 31st of March. Based on this payment, the dividend yield will be 2.6%, which is fairly typical for the industry.

Check out our latest analysis for Renasant

Renasant's Earnings Will Easily Cover The Distributions

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

Renasant 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 Renasant's payout ratio of 27% is a good sign as this means that earnings decently cover dividends.

Over the next 3 years, EPS is forecast to expand by 2.6%. Analysts estimate the future payout ratio will be 26% over the same time period, which is in the range that makes us comfortable with the sustainability of the dividend.

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 2015, and the most recent fiscal year payment was $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.

The Dividend's Growth Prospects Are Limited

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. However, Renasant's EPS was effectively flat over the past five years, which could stop the company from paying more every year. While EPS growth is quite low, Renasant has the option to increase the payout ratio to return more cash to shareholders.

We should note that Renasant has issued stock equal to 13% of shares outstanding. Regularly doing this can be detrimental - it's hard to grow dividends per share when new shares are regularly being created.

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. Distributions are quite easily covered by earnings, which are also being converted to cash flows. Taking this all into consideration, this looks like it could be a good dividend opportunity.

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. Companies that are growing earnings tend to be the best dividend stocks over the long term. See what the 6 analysts we track are forecasting for Renasant for free with public analyst estimates for the company. 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.