Trustmark Corporation (NASDAQ:TRMK) will increase its dividend from last year's comparable payment on the 15th of March to $0.25. Despite this raise, the dividend yield of 2.4% is only a modest boost to shareholder returns.

Trustmark's Earnings Will Easily Cover The Distributions

Even a low dividend yield can be attractive if it is sustained for years on end.

Trustmark has established itself as a dividend paying company with over 10 years history of distributing earnings to shareholders. Past distributions do not necessarily guarantee future ones, but Trustmark's payout ratio of 26% is a good sign as this means that earnings decently cover dividends.

Over the next 3 years, EPS is forecast to expand by 13.7%. The future payout ratio could be 25% over that time period, according to analyst estimates, which is a good look for the future of the dividend.

Trustmark Has A Solid Track Record

Even over a long history of paying dividends, the company's distributions have been remarkably stable. Since 2016, the dividend has gone from $0.92 total annually to $1.00. Dividend payments have grown at less than 1% a year over this period. While the consistency in the dividend payments is impressive, we think the relatively slow rate of growth is less attractive.

Trustmark Could Grow Its Dividend

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. Trustmark has impressed us by growing EPS at 8.2% per year over the past five years. A low payout ratio and decent growth suggests that the company is reinvesting well, and it also has plenty of room to increase the dividend over time.

Trustmark Looks Like A Great Dividend Stock

Overall, we think this could be an attractive income stock, and it is only getting better by paying a higher dividend this year. 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.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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.