What To Know Before Buying Regions Financial Corporation (NYSE:RF) For Its Dividend

Dividends play an important role in compounding returns in the long run and end up forming a sizeable part of investment returns. Historically, Regions Financial Corporation (NYSE:RF) has paid a dividend to shareholders. It currently yields 2.9%. Does Regions Financial tick all the boxes of a great dividend stock? Below, I’ll take you through my analysis.

View our latest analysis for Regions Financial

5 checks you should use to assess a dividend stock

Whenever I am looking at a potential dividend stock investment, I always check these five metrics:

• Is their annual yield among the top 25% of dividend payers?

• Has its dividend been stable over the past (i.e. no missed payments or significant payout cuts)?

• Has dividend per share risen in the past couple of years?

• Is its earnings sufficient to payout dividend at the current rate?

• Will the company be able to keep paying dividend based on the future earnings growth?

NYSE:RF Historical Dividend Yield August 24th 18

How well does Regions Financial fit our criteria?

The current trailing twelve-month payout ratio for the stock is 30.0%, meaning the dividend is sufficiently covered by earnings. In the near future, analysts are predicting a higher payout ratio of 38.3%, leading to a dividend yield of 2.9%. Furthermore, EPS should increase to $1.52. The higher payout forecasted, along with higher earnings, should lead to greater dividend income for investors moving forward.

If there is one thing that you want to be reliable in your life, it’s dividend stocks and their constant income stream. Whilst its per-share payments have increased during the past 10 years, there has been some hiccups. Investors have seen reductions in the dividend per share in the past, although, it has picked up again.

In terms of its peers, Regions Financial has a yield of 2.9%, which is on the low-side for Banks stocks.

Next Steps:

Taking into account the dividend metrics, Regions Financial ticks most of the boxes as a strong dividend investment, putting it in my list of top dividend payers. Given that this is purely a dividend analysis, I urge potential investors to try and get a good understanding of the underlying business and its fundamentals before deciding on an investment. I’ve put together three important factors you should further research:

1. Future Outlook: What are well-informed industry analysts predicting for RF’s future growth? Take a look at our free research report of analyst consensus for RF’s outlook.

2. Valuation: What is RF worth today? Even if the stock is a cash cow, it’s not worth an infinite price. The intrinsic value infographic in our free research report helps visualize whether RF is currently mispriced by the market.

3. Other Dividend Rockstars: Are there better dividend payers with stronger fundamentals out there? Check out our free list of these great stocks here.

To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.