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The board of SouthState Corporation (NASDAQ:SSB) has announced that it will be paying its dividend of $0.52 on the 18th of August, an increased payment from last year's comparable dividend. Even though the dividend went up, the yield is still quite low at only 2.7%.
Check out our latest analysis for SouthState
SouthState's Earnings Will Easily Cover The Distributions
If it is predictable over a long period, even low dividend yields can be attractive.
SouthState has established itself as a dividend paying company with over 10 years history of distributing earnings to shareholders. Based on SouthState's last earnings report, the payout ratio is at a decent 28%, meaning that the company is able to pay out its dividend with a bit of room to spare.
Looking forward, earnings per share is forecast to fall by 11.2% over the next 3 years. Despite that, analysts estimate the future payout ratio could be 31% over the same time period, which is in a pretty comfortable range.
SouthState Has A Solid Track Record
The company has a sustained record of paying dividends with very little fluctuation. Since 2013, the annual payment back then was $0.72, compared to the most recent full-year payment of $2.08. This means that it has been growing its distributions at 11% per annum over that time. We can see that payments have shown some very nice upward momentum without faltering, which provides some reassurance that future payments will also be reliable.
The Dividend Looks Likely To Grow
Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. We are encouraged to see that SouthState has grown earnings per share at 15% per year over the past five years. With a decent amount of growth and a low payout ratio, we think this bodes well for SouthState's prospects of growing its dividend payments in the future.
We Really Like SouthState's Dividend
In summary, it is always positive to see the dividend being increased, and we are particularly pleased with its overall sustainability. The distributions are easily covered by earnings, and there is plenty of cash being generated as well. We should point out that the earnings are expected to fall over the next 12 months, which won't be a problem if this doesn't become a trend, but could cause some turbulence in the next year. All in all, this checks a lot of the boxes we look for when choosing an income stock.
Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. However, there are other things to consider for investors when analysing stock performance. Case in point: We've spotted 2 warning signs for SouthState (of which 1 is potentially serious!) you should know about. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.