Pinnacle Financial Partners, Inc. (NASDAQ:PNFP) has announced that it will pay a dividend of $0.22 per share on the 31st of May. This payment means the dividend yield will be 1.1%, which is below the average for the industry.

See our latest analysis for Pinnacle Financial Partners

Pinnacle Financial Partners' Payment Expected To Have Solid Earnings Coverage

The dividend yield is a little bit low, but sustainability of the payments is also an important part of evaluating an income stock.

Pinnacle Financial Partners has a long history of paying out dividends, with its current track record at a minimum of 10 years. While past records don't necessarily translate into future results, the company's payout ratio of 13% also shows that Pinnacle Financial Partners is able to comfortably pay dividends.

Over the next 3 years, EPS is forecast to expand by 53.5%. Analysts forecast the future payout ratio could be 11% over the same time horizon, which is a number we think the company can maintain.

Pinnacle Financial Partners Has A Solid Track Record

The company has been paying a dividend for a long time, and it has been quite stable which gives us confidence in the future dividend potential. The annual payment during the last 10 years was $0.32 in 2014, and the most recent fiscal year payment was $0.88. This works out to be a compound annual growth rate (CAGR) of approximately 11% a year over that time. It is good to see that there has been strong dividend growth, and that there haven't been any cuts for a long time.

The Dividend Has Growth Potential

Investors could be attracted to the stock based on the quality of its payment history. It's encouraging to see that Pinnacle Financial Partners has been growing its earnings per share at 7.8% a year over the past five years. Pinnacle Financial Partners definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

Pinnacle Financial Partners Looks Like A Great Dividend Stock

Overall, we think that this is a great income investment, and we think that maintaining the dividend this year may have been a conservative choice. Earnings are easily covering distributions, and the company is generating plenty of cash. 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. For example, we've picked out 1 warning sign for Pinnacle Financial Partners that investors should know about before committing capital to this stock. If you are a dividend investor, you might also want to look at our curated list of high yield 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.