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The board of Truist Financial Corporation (NYSE:TFC) has announced that it will pay a dividend of $0.52 per share on the 1st of September. The dividend yield will be 6.3% based on this payment which is still above the industry average.
Check out our latest analysis for Truist Financial
Truist Financial's Dividend Forecasted To Be Well Covered By Earnings
If the payments aren't sustainable, a high yield for a few years won't matter that much.
Having distributed dividends for at least 10 years, Truist Financial has a long history of paying out a part of its earnings to shareholders. Based on Truist Financial's last earnings report, the payout ratio is at a decent 48%, meaning that the company is able to pay out its dividend with a bit of room to spare.
Looking forward, EPS is forecast to rise by 6.0% over the next 3 years. Analysts forecast the future payout ratio could be 47% over the same time horizon, which is a number we think the company can maintain.
Truist Financial Has A Solid Track Record
The company has an extended history of paying stable dividends. Since 2013, the dividend has gone from $0.80 total annually to $2.08. This implies that the company grew its distributions at a yearly rate of about 10% over that duration. 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.
Dividend Growth May Be Hard To Achieve
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 4.5% a year for the past five years, which isn't massive but still better than seeing them shrink. Truist Financial is struggling to find viable investments, so it is returning more to shareholders. This could mean the dividend doesn't have the growth potential we look for going into the future.
We Really Like Truist Financial'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. Earnings are easily covering distributions, and the company is generating plenty of cash. All of these factors considered, we think this has solid potential as a dividend stock.
Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. Companies that are growing earnings tend to be the best dividend stocks over the long term. See what the 17 analysts we track are forecasting for Truist Financial for free with public analyst estimates for the company. If you are a dividend investor, you might also want to look at our curated list of high yield dividend stocks.