SouthState Corporation's (NASDAQ:SSB) dividend will be increasing from last year's payment of the same period to $0.50 on 19th of August. Even though the dividend went up, the yield is still quite low at only 2.4%.
SouthState's 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.
SouthState has a long history of paying out dividends, with its current track record at a minimum of 10 years. Taking data from its last earnings report, calculating for the company's payout ratio shows 31%, which means that SouthState would be able to pay its last dividend without pressure on the balance sheet.
The next 3 years are set to see EPS grow by 35.2%. Analysts forecast the future payout ratio could be 25% over the same time horizon, which is a number we think the company can maintain.
SouthState Has A Solid Track Record
The company has a sustained record of paying dividends with very little fluctuation. The dividend has gone from an annual total of $0.68 in 2012 to the most recent total annual payment of $2.00. This works out to be a compound annual growth rate (CAGR) of approximately 11% a year over that time. Rapidly growing dividends for a long time is a very valuable feature for an income stock.
The Dividend Has Growth Potential
The company's investors will be pleased to have been receiving dividend income for some time. We are encouraged to see that SouthState has grown earnings per share at 9.0% 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.
SouthState Looks Like A Great Dividend Stock
Overall, a dividend increase is always good, and we think that SouthState is a strong income stock thanks to its track record and growing earnings. The company is easily earning enough to cover its dividend payments and it is great to see that these earnings are being translated into cash flow. All in all, this checks a lot of the boxes we look for when choosing an income stock.
It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. For example, we've picked out 1 warning sign for SouthState that investors should know about before committing capital to this stock. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.
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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.
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