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Have you been keeping an eye on Simmons First National Corporation’s (NASDAQ:SFNC) upcoming dividend of US$0.16 per share payable on the 05 April 2019? Then you only have 3 days left before the stock starts trading ex-dividend on the 14 March 2019. What does this mean for current shareholders and potential investors? Below, I will explain how holding Simmons First National can impact your portfolio income stream, by analysing the stock’s most recent financial data and dividend attributes.

View our latest analysis for Simmons First National

Here’s how I find good dividend stocks

When researching a dividend stock, I always follow the following screening criteria:

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

• Has it consistently paid a stable dividend without missing a payment or drastically cutting payout?

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

• Is is able to pay the current rate of dividends from its earnings?

• Will it have the ability to keep paying its dividends going forward?

How does Simmons First National fare?

The company currently pays out 26% of its earnings as a dividend, according to its trailing twelve-month data, which means that the dividend is covered by earnings. Going forward, analysts expect SFNC’s payout to increase to 30% of its earnings. Assuming a constant share price, this equates to a dividend yield of around 2.8%. In addition to this, EPS should increase to $2.37. The higher payout forecasted, along with higher earnings, should lead to greater dividend income for investors moving forward.

When considering the sustainability of dividends, it is also worth checking the cash flow of a company. Companies with strong cash flow can sustain a higher payout ratio, while companies with weaker cash flow generally cannot.

If there’s one type of stock you want to be reliable, it’s dividend stocks and their stable income-generating ability. In the case of SFNC it has increased its DPS from $0.38 to $0.64 in the past 10 years. It has also been paying out dividend consistently during this time, as you’d expect for a company increasing its dividend levels. This is an impressive feat, which makes SFNC a true dividend rockstar.

In terms of its peers, Simmons First National produces a yield of 2.5%, which is on the low-side for Banks stocks.

Next Steps:

With this in mind, I definitely rank Simmons First National as a strong dividend stock, and makes it worth further research for anyone who likes steady income generation from their portfolio. 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 pertinent factors you should look at: