As part of its 2017 capital plan (approved by the Federal Reserve), Regions Financial Corporation’s (RF - Free Report) board of directors announced a 29% hike in the company’s quarterly common stock dividend. The revised quarterly dividend now comes in at 9 cents per share compared with the previous figure of 7 cents. This dividend will be paid on Sep 29 to shareholders of record as of Sep 8, 2017.
Since 2013, Regions has been raising its dividend annually. From paying 1cent a share as quarterly dividend during the financial crisis, the company has come a long way in displaying its capital strength. Prior to this hike, the company had raised its dividend by 7.7% (from 6.5 cents to 7 cents per share) in Apr 2017.
Considering Thursday’s closing price of $14.39 per share, the dividend yield is currently valued at 2.5%.
Additionally, Regions announced a cash dividend of $15.9375 per share of Series A Preferred Stock outstanding (equivalent to approximately $0.398438 per depositary share) and a cash dividend of $15.9375 per share of Series B Preferred Stock outstanding (equivalent to approximately $0.398438 per depositary share). Both these dividends will be paid on Sep 15 to stockholders of record as of Sep 1, 2017.
Further, Regions’ shares rallied 60.8% in the last one year compared with 36.7% growth recorded by the industry it belongs to. Further, the company has a Momentum Style Score of ‘A’.
Are you contemplating investment in this value enhancing Zacks Rank #3 (Hold) stock? Before taking any decision, let’s have a look at Regions’ fundamentals and growth prospects.
Earnings Strength: Regions has witnessed historical (3–5 years) earnings per share growth of 15.33% compared with 12.50% growth for the industry. In addition, the company’s estimated long-term EPS growth rate of 15.82% promises rewards for investors. It also recorded an average positive earnings surprise of 6.89%, over the trailing four quarters.
Prudent Expense Management: Though non-interest expenses increased during the first quarter of 2017, the figure declined in the second quarter. Furthermore, expenses remained volatile in 2015 and 2016, and witnessed a negative Compound Annual Growth Rate (CAGR) of nearly 3% over the five-year period (2010–2014). Notably, the company is on track for a $300-million expense reduction by 2018 (through consolidation of 100–150 branches). Additionally, encouraged by the recent increases in market interest rates, management anticipates eliminating an additional $100 million by 2019.
Leverage: Regions’ debt/equity ratio is 0.42 against the S&P 500 average of 0.68, indicating lower debt burden compared with the industry. It highlights the company’s sound financial flexibility.
Stock is Undervalued: Regions has a P/E ratio of 14.53x compared to the S&P 500 average of 18.86x. In addition, the company has a P/B ratio of 1.07x compared to the S&P 500 average of 3.27x. Based on these ratios, the stock seems undervalued.
Stocks to Consider
BancFirst Corporation (BANF - Free Report) has been witnessing upward estimate revisions for the last 30 days. Also, the company’s shares have risen nearly 60.8%, over the last one year. It sports a Zacks Rank #1 (Strong Buy), at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
BOK Financial Corporation (BOKF - Free Report) has been witnessing upward estimate revisions for the last 30 days. Over the last one year, the company’s share price has been up more than 32%. It currently carries a Zacks Rank #2 (Buy).
JPMorgan Chase & Co. (JPM - Free Report) has been witnessing upward estimate revisions for the last 30 days. Additionally, the stock soared nearly 43.1%, over the past one year. It currently has a Zacks Rank #2.
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