Following the release of impressive first-quarter 2014 earnings results, south-east bank Regions Financial Corporation (RF) yet again came out with good news for its shareholders. The company declared a 66.7% hike in its quarterly cash dividend to 5 cents per share. The new dividend will be paid on Jul 1 to shareholders of record as of Jun 13.
Further, Regions authorized share repurchase of up to $350 million in common stock with an expiration date of Mar 31, 2015.
The company has a record of consistently paying regular quarterly dividend. Despite being hit by the financial crisis, Regions did not discontinue its dividend payment but was forced to slash its dividend from 38 cents to a penny in 2008. However, as the company’s performance is gradually reviving, it is making efforts to strengthen stockholders’ value through efficient capital deployment activities. Notably, in 2013, the company hiked its dividend to 3 cents per share.
The latest announcement is in accordance with Regions’ 2014 capital plan under Comprehensive Capital Analysis and Review (CCAR) that got the Federal Reserve’s approval on Mar 26, 2014. Though the revelation is not a surprise but it definitely imparts optimism to investors.
Further, we remain encouraged owing to Regions’ strong and improved capital position that is poised to benefit shareholders and the company in the long run. As of Mar 31, 2014, Regions’ Tier 1 capital ratio came in at an estimated 11.9% compared with 12.4% in the prior-year quarter. Basel III common equity Tier 1 ratio was 10.8%, up from 9.1% in the prior-year quarter. Tier 1 common risk-based ratio was estimated at 11.4%, up from 11.2% in the prior-year quarter.
Regions currently carries a Zacks Rank #3 (Hold). However, investors may consider it as a value stock not only because of its decent dividend yield of 1.94% but also its lower PE of 12.22, reflecting adequate room for growth going forward.
Some better ranked stocks worth considering include BNC Bancorp (BNCN), Capital City Bank Group Inc. (CCBG) and Farmers Capital Bank Corp. (FFKT). All these companies hold a Zacks Rank #1 (Strong Buy).
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